Committee for a Responsible Federal Budget
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$100 Billion of Giveaways Could Accompany Year-End Omnibus Package

Dec 11, 2020 | Other Spending

If lawmakers pass a short-term continuing resolution as passed by the House, they will have until December 18 to fund the government and enact COVID relief. We have warned several times against undermining needed COVID relief with extraneous measures. Now, reports suggest policymakers are considering adding expensive unrelated measures to the omnibus funding bill in an effort to force through tax and spending items unrelated to the pandemic or evade the already-high budget caps.

Though talks remain fluid, we estimate lawmakers could add as much as $100 billion of debt-financed spending and tax cuts to year-end legislation. These measures have nothing to do with the current economic and public health crisis and would be on top of a possible $900 billion COVID relief package.

Policy Potential Cost
Pension Bailout ~$60 billion
Tax Extenders ~$15 billion
Cap Exemptions >$15 billion
Phony CHIMPs $15 billion
Total >$100 billion

Source: CRFB calculations based on Congressional Budget Office and Joint Committee on Taxation estimates.

Specifically, reports suggest policymakers are considering the following:

  • A $60 billion pension bailout. According to Roll Call, negotiators are working on a multiemployer pension bailout similar to the Rehabilitation for Multiemployers Pension Act. That bill would provide grants and loans to multiemployer pension plans in financial trouble. CBO estimated the legislation would cost $64 billion over ten years, though that may even be an underestimate since the legislation relies on loans to pensions being paid back in one-time "balloon payments" in 30 years, which future lawmakers would likely face pressure to cancel. This legislation – and the bulk of the problems with multiemployer pensions – pre-dates the current crisis.
  • Up to $15 billion of tax extenders. A number of temporary tax provisions unrelated to COVID expire at the end of the year. These include renewable energy credits, a paid leave credit (separate from an also expiring credit for paid COVID leave), an expanded medical expense deduction, lower tax rates for alcohol, and a variety of other business tax breaks. Extending them all for a year would cost about $15 billion. It's possible that lawmakers might not include this full package in a year-end deal, but even extending only the lower alcohol taxes would cost $1 billion.
  • Over $15 billion of cap exemptions. Lawmakers are discussing making a few adjustments to the spending caps for certain Veterans Affairs (VA) health spending and harbor maintenance that would allow them to increase spending elsewhere. In 2014, lawmakers set up a temporary mandatory program to allow certain VA beneficiaries to get care in private facilities, but a few years ago, that program was replaced with a similar one whose funding is appropriated annually. By exempting this program from the spending cap, lawmakers could use that money for other programs, increasing total spending by a reported $12.5 billion in 2021. In addition, they are discussing exempting Harbor Maintenance Trust Fund spending from the caps, which would increase spending by $4 billion. These $17 billion of exemptions would come on top of the $153 billion cap increase ($72 billion for non-defense programs specifically) enacted last year.
  • Up to $15 billion of phony CHIMPS. A routine feature of appropriations bills this decade is the use of phony changes in mandatory programs (CHIMPs) to increase spending caps. While trading CHIMPs for cap increases can be legitimate if the CHIMPs actually produce savings, the vast majority of CHIMPs don't save any money either because the funds they cut wouldn't have been spent anyway, or spending is shifted into the following year. A previous budget resolution limited the amount of phony CHIMPs but still allows $15 billion in FY 2021, so they can add that much spending without legitimate offsets.

While all of these policies are on the table and some may be worthwhile priorities, none belong on an end-of-year omnibus bill without offsets. None of these policies are necessary to fund the government or are related to addressing the current public health and economic crisis. In addition, they could cost hundreds of billions over ten years if the temporary policies are extended permanently. Given the massive 21 percent boost in discretionary spending caps since 2017, lawmakers should be able to fund core functions of government without relying on gimmicks. Any other new policies not related to the current crisis should be fully offset.

As we said in our recent press release on attempts to put non-relief provisions in a COVID bill, "These giveaways might seem small in the grand scheme of things, but they reflect an unfortunate habit of using political compromises to funnel taxpayer dollars where they aren't needed.... In the middle of a pandemic and economic crisis, this kind of waste should not be tolerated."

It makes sense to borrow for emergencies, but policies unrelated to the current crisis should be paid for.