The budget deal – A principled compromise or a cowardly sell-out?

Does this deal represent a sell-out by conservatives? Or did they stick to their principles and reach an acceptable compromise? Photo: AP

WASHINGTON, December 13, 2013 — Members of the House and the Senate reached a deal this week to fund federal government spending for the next two years. The proposal is likely to pass both chambers of Congress and be signed into law by President Obama.

Neither Democrats nor Republicans are completely satisfied with the deal. Conservative Republicans seem to be more vocal in their opposition. Is the deal a principled compromise or a cowardly sell-out?


SEE RELATED: Washington’s Budget Deal: The not-so-perfect gift for Christmas?


Congress has a long history of being divided and having difficulty passing legislation that deals with fiscal issues. Liberals feel that the government does not do enough to take care of the bottom 15 percent of income earners. They wanted more spending in the budget to extend unemployment benefits for the approximately 1.3 million Americans who have already been collecting for about two years. They also wanted to reduce the deficit by raising taxes on the wealthy.

The conservatives’ position is that government already spends too much. They note that the 53 percent of Americans who actually pay federal income tax are Taxed Enough Already, so that raising taxes is out of the question; reducing the tax burden is their goal. When Congress and the president could not reach a deal to raise the debt ceiling, the sequester that was suggested by the president and approved by Congress in 2011 significantly reduced government spending. Conservatives believe that this hard fought victory should not be abandoned.

Conservatives believe that the current deal is a victory for liberals. Spending will increase by about $32 billion per year. New “revenue enhancements” in the form of higher user fees for air travel and increased contributions to retirement accounts for selected government employees have the same result as a tax increase.

So are the Republican leaders cowardly sell-outs?


SEE RELATED: Budget Deal: The GOP is playing the long game


The principles of the conservatives include reducing the role of government, which will result in reduced government spending, reduced federal income tax rates, eventually balancing budgets and less government regulation. They also believe in adhering to the Constitution, especially when it concerns the checks and balances designed to avoid too much power in the hands of too few. The current budget deal is consistent with those principles, in that taxes were not really increased, government spending was brought under greater control (even if it is higher than under the sequester) and Congress got back control of spending by eliminating continuing resolutions that gave the executive branch far too much power.

This deal also marks the first time in five years that a budget bill passes with largely bipartisan support, which is exactly how our government is supposed to function. The reality is that since Thomas Jefferson and John Adams engaged in similar debates, one position has always favored a larger social responsibility from government and a less unequal distribution of income, while the other has always stressed individual responsibility, smaller government, and income distributed according to market wage, regardless of the inequalities that might result.

In a Democracy we are supposed to welcome healthy debate. In the past we have tried to use those debates to form policy that benefits the majority of the people without infringing on the basic rights of anyone. The result is usually a compromise solution.

This inability to find compromise has hindered progress since 2009. It was then that the president’s party had a majority in the House and, after Arlen Spector switched parties, a super majority in the Senate. That meant that if every member of his party voted for what he wanted, he did not need a single vote from the opposition. He passed his disastrous Affordable Care Act without one vote from the GOP. This created an atmosphere where compromise was impossible. That atmosphere persisted until this budget deal.

Many conservatives oppose this budget deal for good reason, and they make a strong point. In fiscal 2013, the actual amount of government spending decreased for the first time since the 1950’s. The sequester is, like the Affordable Care Act, the law of the land, so there is no reason to increase spending at all. This deal also does not address the non-discretionary government spending which accounts for more than 70 percent of the total dollars that the federal government spends. It also does not address tax reform.

But is does stay broadly within the principles of not raising taxes and controlling government spending. It does represent a spirit of compromise that will be necessary to govern effectively. Perhaps it will eventually lead our elected leaders to pursue healthy debate where each tries to “seek a solution” rather than to “sell a position.” If it leads to that, the current budget deal really will represent a principled compromise.


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Michael Busler

Michael Busler, Ph.D. is a public policy analyst and an Associate professor at Richard Stockton College teaching Finance, Financial Institutions, Introduction to Financial Management, Game Theory, Graduate Managerial Economics, Graduate Financial Management. 

 

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