July 26, 2014

Driven to Distraction -- and Creative Accounting

Although Congress has plenty of serious budget work to do, lawmakers in both parties can’t seem to resist frittering away time and confusing the public with various proposals that serve no useful purpose. Last week offered a couple good examples.

House Republicans distracted themselves with a bill that would set priorities for payments on federal obligations if the debt limit were reached. There’s understandable confusion and disagreement over what exactly the bill would do, but the general idea seems to be that the federal government could somehow limit the damage of a default by presenting itself to the world as only a partial deadbeat.

As approved by a party-line vote Wednesday in the House Ways and Means Committee, the legislation would tell the Treasury to continue making payments on principal and interest on U.S. debt obligations – and keep Social Security checks going out, of course.

Becoming a partial deadbeat apparently requires some special accounting rules, and so those were tacked onto the legislation. Alas, the nation’s creditors and global financial markets are under no obligation to embrace lawmakers’ unconventional notions about what might constitute a government default.

In any case, there is really no reason for House Republicans to toy with breaching the debt limit in the first place. Refusing to pay the nation’s bills is not the same thing as economizing.

Democrats, meanwhile, offered some creative accounting of their own last week. Senate Majority Leader Harry Reid introduced a bill that presents previously planned reductions in war spending as a new exercise in frugality.

This alleged bonanza could then be used to offset a suspension of real spending cuts that are now scheduled under sequestration.

While Washington needs to find something better than sequestration, fake savings from military draw-downs that are already scheduled are hardly the answer. This wasn’t the first time that some lawmakers have tried to pass off such savings as new; Concord Coalition Executive Director Robert L. Bixby memorably referred to such tactics in late 2011 as “the mother of all budget gimmicks.”     

So here’s a suggestion: Instead of wasting time trying to find new ways to duck old problems, why not just fix the problems?