Committee for a Responsible Federal Budget

"Deficit Spending: Trouble on the Horizon?

Apr 16, 2010 | Budget Process| Health Care

Congress this week demonstrated once again that members aren’t yet willing to embrace the new era of fiscal responsibility that was supposed to start with enactment of the PAYGO law earlier this year. The House and Senate sent President Obama legislation that would extend for two months unemployment benefits and several other expired programs.  Those programs include COBRA health insurance premium subsidies for workers who have lost their jobs, the federal flood insurance program, and a Medicare fix that would delay cuts in payments to physicians.

Congress failed to find any offsets for the extensions, so the spending simply will add to the deficit.

So far this year,  Congress has done a pretty good job of paying for legislation, as the PAYGO scorecard maintained by OMB shows. But additional danger signs are on the horizon. Congress has not figured out how to pay for—or even if members want to pay for—long-term legislation that would extend these benefit programs. And Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, wants to establish a $23 billion jobs program to help school districts and public colleges avert layoffs that may result from state budget crises. It’s a popular cause, but will it be offset by cuts elsewhere? And what else might come up as an "emergency"? 

Congress is likely to struggle with several additional popular, but expensive programs later this year. Will Congress find offsets for any changes to the Alternative Minimum Tax? Do members of the House and Senate want to find ways to pay for extensions of several mddle class tax cuts that were passed in 2001 and 2003? If not, that spending simply will increase the deficit and fiscal restraint will continue to be an unreached goal.

 Following is a list of items enacted since the beginning of the year that will increase the deficit. The Committee for a Responsible Federal Budget will update this list as warranted:

Mandatory Spending Without Offsets--2010

2010-2015 Cost
Direct Spending 
Unemployment Benefit Extension$12.95 billion
COBRA Benefit Extension$227 million
Medicare Physician Payments$2.12 billion
Extension of Poverty Guidelines$62 million
Satellite Television Extension$2 million
Extension of Small Business Loans$80 million
Spending Sub-Total $15.436 billion
  
Revenue Loss 
Unemployment Benefit Extension-$915 million
COBRA Benefit Extension-$1.840 billion
Satellite Television Extension-$2 million
Revenue Sub-Total$2.753 billion
  
Impact on Deficit$18.19 billion