Proposed changes by some Republicans in Congress suggest using a “current policy” baseline instead of the traditional “current law” baseline in the budget reconciliation process. This shift could result in detrimental fiscal irresponsibility that may allow either party to bypass crucial budgetary controls, ultimately causing a substantial increase in the national debt for years to come.

The budget reconciliation process in Congress allows certain budget modifications with a 51-vote majority in the Senate. This process includes the Byrd Rule, established under the Budget Act 35 years ago to prevent long-term fiscal harm to the United States.

At the core, the issue lies in the comparison of proposed policy changes to the “before” scenario. The dilemma revolves around deciding whether to assume this year’s policies continue indefinitely, known as “current policy,” or to reflect automatic scheduled changes, known as “current law.”

While the dispute may appear to be excessively technical, it significantly impacts fiscal policymaking by influencing how trillions of dollars in the budget are handled within the regulations.

Advocates for the current policy baseline argue that it is unfair that spending is treated differently than taxes in the current law baseline, making it easier to increase spending than to lower taxes. This justification lacks validity and is insufficient to warrant such a substantial shift in the budget process.

Furthermore, the notion of adjusting discretionary spending through reconciliation does not hold as it can only be modified through the appropriation process, rendering the baseline assumption irrelevant. The vast majority of programs eligible for changes through reconciliation are permanent under law, resulting in similar future estimates in both the current law and current policy baseline.

In essence, only a small fraction of reconciliation-eligible programs that are not permanent but assumed to continue in the current law baseline exist. A mere 1.7 percent of total spending is attributed to these programs, set through a bipartisan law alteration in 1985 by the Peter G. Peterson Foundation.

It is imperative to understand that many expiration dates under law have valid policy reasons, including temporary tax relief during crises like natural disasters or the COVID pandemic. Assuming continuity forever in a budget baseline for such policies could lead to fiscal confusion.

Rejecting the announced rationale for implementing the current policy baseline is crucial, as it could obscure significant national debt growth, particularly by sidestepping a point of order under the Budget Act to extend the 2017 tax cuts permanently.

Permitting this change in the legislative process may enable future Congresses to conduct long-term fiscal damage through a technique that involves adding trillions in permanent deficits. Therefore, prudence must be exercised, as changing the baseline could trigger unforeseen consequences regarding national debt management.