June 2019
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Rules for Smaller Government

The House GOP is making it harder to tax and spend

House Republicans are pledging to cut spending, and one early sign they're serious is the rules package they are bringing to the House floor tomorrow. More than the last time it held power, the GOP is changing the rules to make it harder to tax and spend.

Such procedural changes may be boring but they can be crucial to policy success, as Democrats have long understood. Take "paygo," or pay-as-you-go budgeting, under which Democrats required that any tax cut or spending increase had to be offset with other tax increases or spending cuts. The main goal was to make tax cutting that much harder. Paygo always exempted spending increases in existing entitlements and Democrats waived the rule routinely for other spending in any case.

In their new rules, Republicans are giving paygo the heave-ho and substituting a rule called "cut as you go." From now on, increases in mandatory spending--for new or existing entitlements--will require that spending be cut by an equal or greater amount elsewhere in the budget.

Another new rule will make it harder to hide deficit spending by gaming the so-called budget window. The cost of spending bills are scored over periods of one, five and 10 years, and Democrats have routinely disguised the true cost of such bills by pushing the spending into the "out years" beyond a decade. Famously, they also counted 10 years of revenue but only six years of spending to make ObamaCare appear to cut the deficit.

The new House rules require budget projections for four additional 10-year windows. And if mandatory spending increases the deficit by more than $5 billion in any of those 10-year windows, the bill will be subject to a House point of order, forcing Members to vote in favor of increasing deficits.

The GOP also plans to create "spending reduction accounts" to reduce overall spending levels if Congress votes, say, to kill an earmark. Currently, if Congress kills a $300 million Bridge to Nowhere, that money merely goes somewhere else. The new rule says that a successful amendment to strike money from a spending bill will transfer that money to an account that will reduce total amounts appropriated.

Perhaps most encouraging is that the GOP is taking on one of its own sacred spending cows--road building. In 1998, then GOP Transportation Chairman Bud Shuster made it a violation of House rules to reduce spending below the levels that his committee had authorized. This meant that Congress had no choice but to meet this "minimum guarantee" no matter how much revenue was coming in to finance roads under the gas tax.

Under the new rule, Transportation spending will be treated like all other programs. It's an especially good sign that Republicans are sticking with this rule despite howls from the highway and construction lobbies, which rightly thought they owned the GOP during the Newt Gingrich and Tom DeLay eras.

Democrats seem especially angry about another new GOP rule that gives Budget Chairman Paul Ryan the power to unilaterally impose budget limits for the current fiscal year. The Democratic Congress abdicated that authority when it failed to pass a budget resolution last year, giving Appropriators no spending targets to hit.

The GOP rule will let Mr. Ryan set those targets, and the Wisconsin Representative has said he wants to return nonsecurity discretionary spending to 2008 levels. Mr. Ryan's authority will expire when Congress passes its next budget resolution, and in the meantime Democrats should lament their own failure, not the GOP's willingness to impose more spending discipline from the get-go.

All of these rules apply only to the House, and at some point the GOP should rewrite the 1974 Budget Act and the entire tax and spending scoring process, all of which were written by Democrats to advance their policy goal of increasing the size of government. These new rules are nonetheless a welcome sign that Republicans understand their November mandate and are thinking strategically about how to fulfill it.