What Brookings Scholars Are Saying about the Congressional Budget Deal

A budget deal to ease upcoming sequester cuts and avert another government shutdown appears headed to both the Senate and the House for votes, after Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wisc.) came to a deal Tuesday night.

Fellow Benjamin Harris writes that “While the plan is a small step in the right direction, it does almost nothing to mitigate a decade-long decline in public investment and discretionary spending.”

Small-government advocates have cheered the sequester—and opposed the Murray/Ryan compromise—on the reasoning that all government spending is bad spending. But as any introductory economics student can attest, not all spending is equal, and there are big differences in spending to consume and spending to invest: investment leads to a richer life in the future, consumption does not.

Congressional agreement on partially reversing the sequester would be a small but critical first step towards improving public investment. Long-term deficit reduction is undoubtedly one of our nation’s biggest challenges, but the solution lies in cutting back entitlement spending and raising sufficient revenues, not pushing down discretionary spending far below historical lows.

Harris is policy director of The Hamilton Project.

Senior Fellow Sarah Binder reviews the deal in the context of the budget process, stating that it “signals only a sliver of budgetary normalcy.” She is doubtful that the agreement between Democratic and Republican budget negotiators heralds any new bipartisan deals. “More likely,” she argues:

the mini-deal is emblematic of legislative battles in polarized times: Parties come to the table only when the costs of blocking an agreement are too great to shoulder. And even then, parties will give up as little as necessary to avoid the sometimes painful consequences of stalemate.

On Monday, a group of Brookings scholars proposed “Five Good Ideas for a Budget Deal.”

— Senior Fellow Thomas Mann calls for “disabling a good part of the sequester for the next two years and paying for it over a longer period of time with more rational spending cuts and revenue increases.”

— Senior Fellow Bill Galston says Congress can break the legislative logjam by fixing Social Security.

— Elaine Kamarck, senior fellow and director of the Center for Effective Public Management, says “progressive price indexing” is a fair alternative to chained CPI proposals for Social Security reform.

— Fellow Molly Jackman writes that we need more spending, not cutting in these times following an economic recession. “There will be a time,” she says, “in our country’s future to balance the budget” but for now, “austerity cannot be the centerpiece of the Grand Compromise.”

— Senior Fellow Michael O’Hanlon argues that even though the Budget Control Act’s automatic cuts are the “wrong way” to reduce the deficit, “half a sequester is still better than a full one” when it comes to defense spending.

Senior Fellow Ron Haskins called the conference committee on the 2014 budget an argument “over scraps” while “the big picture of the nation’s budget deficit remains unchanged.” He writes:

Despite the overwhelming evidence of impending deficit problems, many members of congress, budget experts, and editorial page writers are denying the problem is that serious. In a situation like this, on the eve of what seems headed for yet another congressional copout, the alarming long-term numbers cannot be stated too often. Nor can the outline of policies that represent the only reasonable deficit solution.

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Last week, Brookings announced the establishment of the Hutchins Center on Fiscal and Monetary Policy.