It is approaching a year since I returned to OMB, and much has happened in the past 12 months on the economic and fiscal fronts -- from the agreement to cut the payroll tax and extend Unemployment Insurance and other key tax credits in December to the agreement to avert a default on the nation’s debt in August. What’s hard to remember amidst the rancorous debate is that despite our differences, at each step, we have found a path to work together to do the people’s business.
For instance, last spring, we narrowly avoided a government shutdown over annual appropriations bills when Congress was able to set aside extreme ideological positions so we could reach a reasonable compromise to cut spending and preserve key investments that will help the country compete and win in the world economy.
Now, as we enter the second month of a new fiscal year, we face a similar challenge. The House has passed several key appropriations bills, and the Senate is moving as well. Passing these bills is important not only to avoid a government shutdown, but also to effectively run the federal government. As I mentioned above, negotiated agreements in April on funding bills and in August on the Budget Control Act show the way for Congress to pass bipartisan bills that the President can sign.
Yet, we face a risk – just as we did entering those negotiations. And that is the risk that ideology will interfere, and that the House will insist on cutting below the two agreements or pursuing divisive policy changes that do not belong on critical funding bills. Now is the time for congressional leaders to reject gridlock, move forward with needed action on the economy, and avoid confirming the low expectations that markets and the American people have for the Congress.
Let me review what is at issue here.
Recall that the appropriations bills for FY 2011 cut $40 billion from the previous year, and the Budget Control Act set tight spending caps that cut covered spending by an additional $7 billion between 2011 and 2012. The President’s original 2012 Budget request called for smaller cuts in this part of the budget and deeper savings elsewhere. Many Republicans wanted bigger cuts here. But after weeks of difficult negotiations, bipartisan majorities agreed with the President to establish caps and to cut program spending under those caps by an additional $7 billion. Congress should honor that agreement and pass appropriations bills that the President can sign into law.
Because of the spring and summer budget accords, non-security discretionary spending is now on track to reach its lowest level as a share of the economy since the President Dwight D. Eisenhower sat in the Oval Office. The President has been clear that we must do more to cut deficits and has proposed a balanced plan for more than $3 trillion in deficit reduction from across the budget on top of the $1 trillion in discretionary spending savings. At a little more than one-third of federal spending and falling, cutting even more deeply in discretionary spending will not significantly improve the fiscal outlook. But looking for one part of the budget to bear all the burden of deficit reduction will threaten our national security and do serious damage to domestic investments in building blocks of our economy like education, innovation, and infrastructure. Balance is the only way to go.
Not only must we honor the overall agreement in the BCA, but final bills must also continue to fund the critical priorities supported in this year’s bipartisan legislation. For instance, the House Republicans have made no secret of their wish to put an end to health care and Wall Street reform, and they seek to prevent implementation of these efforts through the appropriations process. If successful, this would undermine the Affordable Care Act’s ability to end many discriminatory and abusive practices and wring waste out of the health care system. It also would undermine the Wall Street reform the President signed into law which ended the unregulated, opaque, and unrestrained risk-taking that culminated in the financial crisis and recession. We must be able to protect consumers from hidden fees and abusive practices and to give consumers the clear information they need to make good financial decisions. Ending health care and Wall Street reform are major policy choices that should be made in the bright light of day, and not attached to appropriations bills needed to keep the government operating.
Over the last three years, the Nation also has made bi-partisan progress on important domestic investments. For example, Race to the Top and other education reforms are encouraging extraordinary change in education systems for relatively modest investments, and have enjoyed support of Republicans like former Florida Governor Jeb Bush and Senator Lamar Alexander of Tennessee. Those reforms must be allowed to continue. Similarly, the college opportunities created by the Pell grant program should be supported, not snuffed out. We also must make the historically bipartisan investments in clean energy research, innovation, and transportation infrastructure that are needed to create an environment in which businesses can thrive. Finally, we must continue to provide critical support to our most vulnerable populations, such as the homeless and low-income families who are in need of affordable housing.
Based on the agreements of the last year, the path to bipartisan agreement is clear. Sadly, so too is the alternative.
Last February, by a party-line vote, the House passed an omnibus appropriations bill that, in addition to making deep cuts in programs such as Race to the Top, food safety inspections, police officer hiring, and energy research, also stripped funding from Planned Parenthood and blocked enforcement of laws to protect our air and water and health. The President made clear he would veto that bill. Just hours before a government shutdown, the House agreed to reasonable funding levels and acknowledged that appropriations bills were not the place for dozens of ideological provisions – or “riders”– irrelevant to funding the government.
So far this year, the House unfortunately has passed bills with many of the same funding problems and extreme and ideological provisions as we saw in February. The date may have changed, but the President’s priorities have not – nor has his commitment to stop these sorts of measures. Going down this extreme, ideological path will only lead to gridlock.
Instead of pursuing this path, both sides of the aisle should turn to the hard work of finding balanced deficit reduction in the rest of the budget and passing the job-creating measures in the American Jobs Act.
After all, the path of bipartisan compromise is in the best American tradition, one that I have seen Democratic speakers follow as they worked with Republican presidents and Republican speakers follow in working with Democratic presidents. And it is what the American people are demanding of Washington now, and what market observers the world over expect from the world’s largest economy.
Partisan and ideological conflict, as we saw earlier this year, will only distract us from the work of jumpstarting economic growth and getting our fiscal house in order, creating gridlock and uncertainty that can only hurt a fragile economy.
Jack Lew is Director of the Office of Management and Budget