Using Congressional Budget Rules To (Not) Save Money

A new health club opened in my neighborhood recently and I told my wife I wanted to join it. She agreed, providing that I gave up something we were spending elsewhere to pay for the $1,200 annual membership.  I don’t want to give up anything fun so I decided to adopt the Congressional approach to budgeting to achieve such savings.  It turned out to be a snap.

The first thing I did was claim $150 in credit from a restaurant app I use called Open Table.  Each time I use the app to reserve a table it gives me the equivalent of $1 towards a future meal.  Since I got the app five years ago I’ve never gotten around to using these, but now seems a propitious time.

Next, I let our discount deals expire with the cable company and the newspaper. Each has a base price it offers subscribers, but if I call and threaten to stop my subscription they give me the discount for new subscribers. So I let each expire for a week and then called to get the new subscriber deal again. Together, that saved me $850.

I was still a bit short, but then I got an unexpected $200 check from a friend that owed me for tickets I got us for a visit to Wrigley Field last Summer.  I had written off the money off-my friend was jobless at the time--so it represented a genuine windfall.

I presented these “savings” to my wife and she was not at all amused. She agreed to give me credit for this, albeit grudgingly, but that I had to come up with enough savings in 2016 to cover a membership for her as well. I looked up and down our credit card bill and saw an obvious way to save money--our health insurance bill.

I wasn’t going to not pay the thing, of course, but in my game of Congressional cost-saving I didn’t need to do such a thing. I merely called the insurance company, told them that my paychecks were now arriving on the 15th instead of the 1st and asked if I could have my monthly payments pushed back two weeks. After a few minutes on hold they agreed.

This meant that I would now have only 11 insurance payments in the next 12 months instead of 12, saving me $1500 in the next year. Mission accomplished.

As you might have surmised, my wife wasn’t amused, and as of now I’m still working out in my old gym, which doesn’t have a towel service, a juice bar, or even hot water and clean showers most of the time.

The ease with which I can manipulate such a fictional budget constraint when it comes to our own household account is no different from Congress.  Its PAYGO rules are incredibly malleable and the notion that it prevents Congress from spending recklessly is a foolish supposition.

The recent legislation that took a lot of “temporary” tax breaks--many of which are salutary--and made them permanent by merely waiving PAYGO for the bill--is a prime example of its inefficacy.

For the last decade, Congress has come up with increasingly convoluted and dubious paygos to cover the cost of extending these another year.  Paygo was the reason that they were never made permanent, a situation that made no economic sense at all.  It was only when Congress had exhausted all potential paygos that they gave up the ghost and twisted enough arms and legs to make them permanent.

The lesson for small-government advocates is that budget rules guarantee nothing.  A forthcoming Federal Reserve working paper looks at Colorado’s TABOR (which holds annual spending increases to the combined rate of inflation and population growth), widely hailed by conservatives as being the gold standard when it comes to governmental budget rules, and concludes that it did close to nothing to rein spending.  Colorado’s spending history looks no different than other, similar states.

Rules don’t work because nothing can prevent a future Congress from unmaking the rules set forth by the current Congress, there are myriad ways to game any such system, and--most importantly--the biggest ticking budgetary time bomb out there are the entitlement programs that seemingly escape scrutiny in either Congress, or at least the budget rules.  Entitlement spending will go up by over half a trillion dollars a year in the next five years and no mere budget rule can arrest this growth.

The answer is--and always will be--that to keep spending low we need help people understand the true cost of government largesse.  It’s a task that’s easier said than done.