The Line Is Drawn


Wednesday November 20th, 2013   •   Posted by Craig Eyermann at 5:20am PDT   •  

Back on October 27, 2013, we shared John Taylor’s graph showing the difference between the amount of spending outlays involved in the House and Senate Budget proposals for the U.S. government’s 2014 fiscal year:

ii-johntaylor-economicsone-budget-housesenate2013

At the time, we noted that the question before U.S. lawmakers was where they would really draw the line for future spending? Would it be at the lower level drawn for the House budget proposal? Would it be drawn at the much higher level for the Senate’s budget proposal? Or would it be somewhere in between?

We now know the answer. Paul Ryan, the House’s budget committee chairman, has indicated that the line will be drawn at the higher level indicated by the Senate’s budget proposal. The Hill reports:

House Budget Committee Chairman Paul Ryan (R-Wis.) said Tuesday that the country doesn’t need to worry about another government shutdown in January when the current stopgap spending bill runs out.

The government shutdown lasted for 16 days in October after Republicans demanded that President Obama defund his signature healthcare law.

To avoid another shutdown, Ryan said either he and Senate Budget Chairwoman Patty Murray (D-Wash.) would strike a budget deal or Congress would pass a stopgap keeping existing spending levels.

“Either of those two scenarios will prevail and we will not have a government shutdown,” he said at the Wall Street Journal annual CEO Council. “We will keep the government funding at the current level if need be.”

Ryan said that he does not believe there will be any brinkmanship over the debt ceiling in February either. He said Republicans now understand that a shutdown won’t stop ObamaCare because it is a mandatory program, not a discretionary agency budget line item.

That Obamacare was set up as a “mandatory” expenditure is an important consideration, because the federal government’s budgets only deal with so-called “discretionary” expenditures that are funded from general tax revenues. Because mandatory budget items, which include things like paying interest on the national debt and programs funded by dedicated taxes, such Social Security, Medicare, Medicaid, and now Obamacare, have their spending set up on automatic pilot, there isn’t anything that can be negotiated in the regular budget that can affect the amount that is spent on these things.

So why is former Vice-Presidential candidate Paul Ryan throwing in the towel on lower spending?

There is very likely some high level strategy here going on with respect to the current debate over the Obamacare mandatory spending program. By indicating that he will accept the higher level of spending that the Democratic party majority in the Senate desires, Ryan is removing a significant barrier that could keep the members of that party unified in the face of the growing opposition of the American public to both President Obama’s preferred policies and Obamacare.

By being able to split off the Democratic Party Senators who increasingly fear for their re-election in 2014, Ryan is betting that he can force the reform of the federal government’s unsustainable mandatory spending programs, especially Obamacare, while at the same time, revisiting discretionary spending after the 2014 elections, which would be possible if the leadership of the Senate changes hands.




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