WASHINGTON--The Concord Coalition today urged lawmakers not to use the financial rescue bill as a way to subvert fiscally important pay-as-you-go (paygo) budgeting rules. Concord warned that attaching political sweeteners—the extension of expiring tax provisions—to the bailout bill further politicizes the larger debate and deteriorates our nation’s fiscal outlook.
“The financial rescue measure being considered by Congress is an unprecedented emergency action with wide repercussions that must be carefully weighed. It deserves to be considered on its own merits and should not be loaded down with other legislative priorities that distract from the crucial issues at hand. Attaching the tax extenders package only convolutes the larger debate over the bailout bill. The tax extenders are not new policies aimed at addressing the crisis in financial markets. They are routine items that are debated annually by lawmakers on Capitol Hill and, in fact, are the subject of contention between the House and Senate. While the House has fought to subject the extension to paygo rules, the Senate appears determined to pass them without offsets. It is inappropriate to use emergency legislation focused on mitigating an immediate financial crisis to win a struggle over unrelated items. Moreover, enforcing paygo for tax cuts and spending increases on routine legislation is all the more important now, as emergency needs strain the federal budget. Avoiding paygo on these popular tax provisions sends the wrong signal about the need to restore fiscal discipline,” said Robert Bixby, executive director of The Concord Coalition.
The authority for the Treasury Department to borrow $700 billion to purchase “troubled assets” has caused legitimate concerns about budgetary implications. Yet, it is important to distinguish this financial rescue bill from the known costs of the tax extenders. The bailout bill would permit the Treasury to purchase assets which it would sell at a later date. Thus, there is a reasonable expectation of a future, although uncertain, return. More importantly, the bill includes a provision to recoup taxpayer losses incurred from the agreement. This is much different from enacting the extension to expiring tax provisions which will cost billions in lost revenue and are supposed to be offset under the paygo rules adopted by both houses of Congress.
“It is critical that lawmakers resist the temptation to include political sweeteners that only contribute to a deeper long-term fiscal hole. Resort to such tactics is particularly pernicious because the annual consideration of tax extenders is itself an exercise designed to hide costs and abuse the budget process--an evasion of transparency and accounting not unlike the bookkeeping legerdemain that helped fuel the current financial system breakdown. Rather than following Wall Street’s lead, Washington needs to set a better example. Honoring paygo for the tax extenders is a good place to start,” said Bixby.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.