Skip to main content
Menu

Main navigation

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact
    LOADING...
  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit
    LOADING...
  • Publications
    • Studies
    • Commentary
    • Books
    • Reviews and Journals
    • Public Filings
    LOADING...
  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving

Issues

  • Constitution and Law
    • Constitutional Law
    • Criminal Justice
    • Free Speech and Civil Liberties
  • Economics
    • Banking and Finance
    • Monetary Policy
    • Regulation
    • Tax and Budget Policy
  • Politics and Society
    • Education
    • Government and Politics
    • Health Care
    • Poverty and Social Welfare
    • Technology and Privacy
  • International
    • Defense and Foreign Policy
    • Global Freedom
    • Immigration
    • Trade Policy
Live Now

Blog


  • Blog Home
  • RSS

Email Signup

Sign up to have blog posts delivered straight to your inbox!

Topics
  • Banking and Finance
  • Constitutional Law
  • Criminal Justice
  • Defense and Foreign Policy
  • Education
  • Free Speech and Civil Liberties
  • Global Freedom
  • Government and Politics
  • Health Care
  • Immigration
  • Monetary Policy
  • Poverty and Social Welfare
  • Regulation
  • Tax and Budget Policy
  • Technology and Privacy
  • Trade Policy
Archives
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • August 2008
  • July 2008
  • June 2008
  • May 2008
  • April 2008
  • March 2008
  • February 2008
  • January 2008
  • December 2007
  • November 2007
  • October 2007
  • September 2007
  • August 2007
  • July 2007
  • June 2007
  • May 2007
  • April 2007
  • March 2007
  • February 2007
  • January 2007
  • December 2006
  • November 2006
  • October 2006
  • September 2006
  • August 2006
  • July 2006
  • June 2006
  • May 2006
  • April 2006
  • Show More
December 11, 2013 10:40AM

Ryan‐​Murray Budget Deal Replaces Real Spending Restraint of Sequester with Budget Gimmicks and Back‐​Door Tax Hikes

By Daniel J. Mitchell

SHARE

How disappointing, but how predictable.

Politicians approved legislation in 2011 that was supposed to impose a modest bit of spending restraint over the next 10 years.

It wasn't much. The enforcement mechanism, known as sequestration, merely was supposed to guarantee that spending climbed by $2.3 trillion rather than $2.4 trillion over the 10-year period.

Sequester 2013

But something is better than nothing, and the sequester that took place this year was a bitter defeat for President Obama and other advocates of bigger government.

And it also provided comic relief as the White House engaged in hysterical rhetoric in an attempt to scare people about sequestration.

Media Name: sequester-cartoon-beeler.jpg

But now there's a deal to weaken the sequester and allow more government spending over the next two years. Hatched by Paul Ryan, the Republican Chairman of the House Budget Committee, and Patty Murray, the Democrat Chairwoman of the Senate Budget Committee, the most important takeaway is that the agreement will increase spending caps by $63 billion over the next two years.

This chart shows what will happen.


Murray-Ryan Budget Deal



The second most important thing to understand is that the Murray-Ryan deal contains several tax hikes. But since politicians can't resist prevaricating, these provisions are being referred to as "user fees" and "offsetting receipts."

The most outrageous tax hike is the added levy on airline travel. Honest people call this an increase in the ticket tax. The folks in Washington call it an "Aviation security service fee."

There's also a tax hike on private pension plans, as well as additional taxes (oops, I mean "user fees") on trade.

You also won't be surprised to learn that the so-called spending cuts in the agreement are mostly fluff and gimmicks.

Media Name: spending-cuts-cartoon.jpg

The Treasury Department and Justice Department have been told not to spend "unobligated balances" in their forfeiture funds, but that was money they presumably weren't going to spend anyway.

States, meanwhile, have been told they have to pay part of the cost of managing mineral leases on federal lands within their borders. Maybe someone can explain to me why payments from state governments to Washington count as a budget cuts.

And the agreement also assumes that Washington will do a better job of policing fraud in areas such as unemployment insurance and illegal utilization of handouts by prisoners. Those would be positive developments, to be sure, but one has to wonder why they weren't enforcing those laws already.

By the way, the aforementioned tax hikes and make-believe spending cuts are supposed to generate "savings" over 10 years that will "offset" the higher spending that will occur 2014 and 2015.

Needless to say, all the new spending will take place in 2014 and 2015. But I wouldn't hold my breath for alleged savings that are supposed to take effect in the following years.


Media Name: mitchells-first-theorem-of-government.jpg

Simply stated, the ink won't even be dry on this agreement before the lobbyists, politicians, bureaucrats, and interest groups that control Washington start maneuvering to bust the spending caps and weaken the sequester next year. And the following year. And the year after that. And...well, you can fill in the blanks.

So what's the bottom line?

Well, it's clearly a big disappointment that Congressman Paul Ryan engineered this turkey of a deal rather than fighting for the sequester. Heck, this was the guy who put together very good entitlement reforms, yet now he's helping Obama escape the sequester?

To be fair, folks on the Hill have told me that Ryan didn't have much leverage because several Republicans indicated that they wouldn't vote to comply with the sequester spending levels.

But if that's the case, he should have at least forced a vote so the American people could see which GOP politicians are wobbly on the critical issue of restraining Leviathan.

To close on a somewhat optimistic note, it does appear that all the new spending is confined to 2014 and 2015. So if the spending caps are preserved for subsequent years, then it's possible that the long-run trend line of government spending is unaffected.

That would be a good outcome. Not because the long-run trends are positive (if you look at the long-run data, we're screwed), but because at least they wouldn't have made a bad situation even worse.

If you want to damn the Murray-Ryan plan with faint praise, you could say it's not nearly as bad as the read-my-lips deal of George H.W. Bush. That's certainly true, but the sequester would be a much better outcome.

Related Tags
General, Government and Politics, Tax and Budget Policy

Stay Connected to Cato

Sign up for the newsletter to receive periodic updates on Cato research, events, and publications.

View All Newsletters

1000 Massachusetts Ave, NW,
Washington, DC 20001-5403
(202) 842-0200
Contact Us
Privacy

Footer 1

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact

Footer 2

  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit

Footer 3

  • Publications
    • Books
    • Cato Journal
    • Regulation
    • Cato Policy Report
    • Cato Supreme Court Review
    • Cato’s Letter
    • Human Freedom Index
    • Economic Freedom of the World
    • Cato Handbook for Policymakers

Footer 4

  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving
Also from Cato Institute:
Libertarianism.org
|
Humanprogress.org
|
Downsizinggovernment.org