Former Budget Committee Director Warns Against Budgetary Gimmicks
Former Democratic House Budget Committee staff director Tom Kahn recently penned an op-ed for the Wall Street Journal in which he commended Congress for its recent focus on infrastructure investment and raised concerns about lawmakers on both sides of the aisle turning to “dubious offsets” to finance the legislation.
Kahn points out that these offsets, like repurposing spending that has already been authorized or counting on unrealistic economic growth effects, have been widely criticized by Democrats in the past when utilized by Republicans to pass the Bush tax cuts and the Tax Cuts and Jobs Act (TCJA).
Even worse, Kahn warns, there are now both Democrats and Republicans who seem unconcerned with adding to already historically high levels of debt. While borrowing is considered cheap today due to low interest rates, predictions of strong economic growth over the coming years suggest those low rates will not last forever.
Kahn believes that we should be paying for infrastructure investments in earnest and warns of slower economic growth, higher interest rates, and the crowding out of private investment if we do not. Furthermore, spending that is not paid for financially burdens future generations.
Reflecting on his time as staff director of the House Budget Committee, Kahn highlights the success of pay-as-you-go (PAYGO), a policy measure that requires Congress to pay for increases in mandatory spending or tax cuts. He argues that PAYGO was successful in effectively reducing the pace of borrowing until Congress waived it to pass the TCJA. Despite that, PAYGO remains “on the books” and can be successful once again, so long as Congress enforces it.
Kahn goes on to praise President Biden for expressing a desire to avoid deficit spending. While President Biden has suggested raising taxes on the wealthy and corporations, he adds that Congress has many options to offset the costs of infrastructure spending.
Kahn concludes by saying:
It is encouraging to see America on the cusp of making investments that will strengthen our nation and build a better economy. But adding billions in debt will do the opposite. If something is important enough to spend money on, it is important enough to pay for.
