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Why deficit hawks are missing in action on budget, tax bills

The House approved a $1.1 trillion spending bill Friday, as part of a year-end deal that includes a package of tax breaks that passed Thursday. The Senate approved the legislation Friday, 65 to 33.

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    House Speaker Paul Ryan of Wis. speaks during an end-of-the-year news conference on Capitol Hill in Washington, Thursday as the Congress moves toward passage of a $1.1 trillion omnibus spending bill.
    J. Scott Applewhite/AP
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[Update: This story was updated at 12.35 p.m. to include the results of Friday's votes.]

Congress is about to add hundreds of billions of dollars to the national budget deficit, yet the “deficit hawks” on Capitol Hill are largely silent.

“Maybe they should be on the endangered species list,” quipped House minority leader Nancy Pelosi, in a briefing with reporters last Friday.

End-of-year, must-pass monster spending bills are always an ugly business. Both sides say they deplore the practice. But this year’s double whammy – a $1.1 trillion omnibus spending bill and a tax bill expected to cost $780 billion over the next 10 years – is arguably worse. The House passed the tax bill on Thursday, 318 to 109, and the spending bill on Friday, 316 to 113. The Senate passed both measures Friday, 65 to 33.

“The deal not only adds to the debt, it also squanders most of the hard-earned savings from either the ‘fiscal cliff’ deal ($800 billion in revenue) or the sequester (more than $900 billion in spending cuts),” said the nonpartisan Committee for a Responsible Federal Budget, in a statement. 

Many of the lawmakers who have spoken out in the past for fiscal restraint “are just being silent,” says Maya MacGuineas, CRFB president and a longtime advocate for lower federal deficits. “There is no leadership on the issue.”

Insiders cite three reasons for the silence of the deficit hawks on this year's big spending and tax deals:

New leadership: In September, an impasse with conservative hard-liners over FY 2016 spending forced Speaker John Boehner to announce his resignation to avoid “prolonged leadership turmoil.” But he stepped down at the end of October only after negotiating a long-term budget agreement that averted a government shutdown. Mr. Boehner called the agreement "cleaning out the barn." Members of the Freedom Caucus call it "Boehner’s legacy.”

With a government shutdown looming this week, lawmakers on both sides of the aisle say that they have run out of time. The only option, short of a government shutdown, which even tea party lawmakers disavow, is to pass the package and save the deficit hawkery for next year.

“I kind of inherited this cake that was pretty much already baked,” current Speaker Paul Ryan told Fox News. “This is not how government should work. Now that we have a new year coming, I want to do this differently.”

Mr. Ryan pledges a leadership that’s more open, transparent, and inclusive. Tax and spending decisions in the new year will follow what lawmakers call "regular order" – that is, working legislation through committee, not imposed from the top, with opportunities for members to amend measures on the floor. That promise has given him credibility, at least for now, with the insurgent wing of the caucus that toppled Boehner.

“I see an awful lot of our members who really want Ryan to succeed,” says Rep. Tom Cole (R) of Oklahoma, a deputy majority whip. “It’s easier to whip than it was six or eight years ago. I say that with no criticism of John Boehner. [Speakers] build up scar tissue over the years, and that hasn’t happened to Ryan yet.”

Rep. Dave Brat (R) of Virginia, who defeated former House majority leader Eric Cantor in the 2014 GOP primary, calls the omnibus bill “a disaster.” “We’re breaking our pledge on the budget caps to the American people, we’ve lost fiscal discipline, and we’re throwing it all on the next generation,” he told Politico. But he and other members of the Freedom Caucus also praised Ryan for “lining it up to do the right things,” to ensure that leadership in the future “can’t hijack the budget at the end of the year and throw [in] the kitchen sink, which we just did.”

New normal.  Even hard-line deficit hawks can slip into the habit of big spending, say budget watchers. That's because it's easier to rally support for legislation that gives something to fellow members than a bill that takes something away.

After soaring budget deficits in the early years of the Obama administration, including a $1.4 trillion federal deficit in 2009 at the end of the Great Recession, Congress adopted measures to rein in spending and deficits began to drop. Suddenly, a $500 billion deficit looked like progress, then acceptable and even the new normal. “It started with the president declaring the problem solved when the deficits started coming down,” says Ms. MacGuineas of the CFRB. 

Moreover, every year lawmakers enact a package of tax “extenders,” otherwise set to expire, without paying for them. Typically, tax extenders are slipped into some other must-pass bill at the end of the year. Some of these expiring tax breaks, such as the research and experimentation tax credit for small businesses, have been routinely extended for more than three decades.

The bipartisan deal on tax extenders voted out of the House on Thursday includes tax breaks favored by both sides. Democrats hail making permanent tax credits that support families living barely above the poverty line, such as improvements in the Earned Income Tax Credit and the Child Tax Credit, set to expire at the end of 2017.

“The tax parts of the new bipartisan deals include provisions that mark a major achievement in reducing poverty and helping poor and modest-income working families, but also disturbing provisions that could cause budget deficits and health care costs to rise substantially over time,” writes Robert Greenstein of the Center on Budget and Policy Priorities, a liberal-leaning think tank in Washington.

Republicans lead the push for many of the business tax credits. They say that the move to permanently extend tax breaks is not adding billions to the deficit because these measures represent current government spending.

“It’s a much more honest way of doing the tallying,” says Rep. Mike Kelly (R) of Pennsylvania. “We have to know the actual cost of running the government.”

Fear of terrorism. Recent terrorist attacks, dubbed a "new phase of terrorism" by President Obama, are registering with voters back home and with lawmakers across the political spectrum.

“We’re faced with an existential threat from Islamic jihad and it becomes a bigger issue with the San Bernardino attacks and the Paris attacks,” says Rep. Steve King (R) of Iowa, an early tea party activist.

“The American people want to be safe, and I think that has eclipsed some of this [fiscal] discussion,” he adds, speaking off the House floor on Wednesday.

In fact, opposition to the omnibus spending bill from tea party conservatives was not inevitable, Rep. John Fleming (R) of Louisiana, a member of the Congressional Tea Party Caucus, told the Daily Signal, a news website backed by the conservative Heritage Foundation. Adding more riders, such as stricter security protocols for Syrian and Iraqi refugees to the US, could have “peeled Freedom Caucus members to support the bill,” he said.

Rep. Jim Jordan (R) of Ohio, who chairs the House Freedom Caucus, says that his group is unlikely to vote for the spending bill for national security reasons – not because it spends too much.

“Sadly, this bill does not adequately address the security issue, nor does it have the common sense, widely supported pro-life riders that we discussed,” he said, in a statement, also referring to a Republican proposal to defund Planned Parenthood.

But adding hundreds of billions to the national debt is also not good for national security, says Steve Ellis, vice president for Taxpayers for Common Sense, a leading fiscal watchdog group in Washington.

"If we don’t take care of our economy and take care of our debt, we’re not going to be able to afford the premier military in the world," Mr. Elllis said, citing comments by Adm. Michael Mullen, then chairman of the Joint Chiefs of Staff, during a tour of the Midwest in 2010. "The most significant threat to our national security is our debt," Admiral Mullen said. 

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