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For Budgeting, Tough Accounting for 'Gimmicks'

Bill Clark/CQ Roll Call File Photo
Recent legislation proposed by Senate Democrats to extend unemployment benefits by reducing companies’ pension payments has been derided by outside groups on both sides of the political spectrum.

Assessments of a proposal by Senate Democrats this month to offset the cost of extending emergency unemployment benefits by temporarily reducing companies’ pension payments won rare agreement from the right and the left.

The conservative Heritage Foundation and left-leaning Center on Budget and Policy Priorities both derided the idea, called “pension smoothing,” as a move with some short-term budget gains that would quickly turn into costs.

In other words, it was another in a line of gimmicks, the groups said, aimed at jerry-rigging the numbers to make this year’s budget work out, sort of, while leaving the real impact to be considered sometime later.

The use of pension payments, budget watchers say, is one of an array of tweaks, adjustments, forecasting modifications and accounting maneuvers Congress seems to be turning to more frequently as lawmakers wrestle with the demands of popular programs and projections that project a rapidly growing cumulative deficit over the next decade.

Just last week, the Committee for a Responsible Federal Budget sent up a warning of what it called budget gimmicks to come as the Congressional Budget Office added $1 trillion to its deficit forecast through 2023.

CRFB President Maya MacGuineas said the most that can be expected of the current Congress is that members avoid making the long-term budget picture worse. “We look at the political environment with sort of resigned realism, and I think the best principle we think we should be able to expect people to hold themselves to this year is doing no harm,” she said.

Some approaches to offsetting spending increases or tax cuts that have come in for derision include shifting revenue toward the present from the future, shifting spending cuts to the future from the present, and counting on savings that are unlikely to materialize.

Critics say the gimmicks are exploited by Republicans and Democrats alike.

Last year, the fiscal cliff deal (PL 112-240) included a provision offered by Senate Republicans to partially pay for sequester relief with an increase in short-term revenue generated by a liberalization of the conversion of tax-deferred retirement funds into Roth individual savings accounts.

In 2012, the Congress approved a two-year highway bill that was partially paid for through a $9.4 billion pension smoothing provision.

“Both parties are prone to resorting to budget gimmicks to pass legislation that increases spending and claims deficit reduction at the same time,” said Romina Boccia, a fellow at the Heritage Foundation. “Often it means using a fake pay-for or phony offset.”

Ed Lorenzen, senior adviser to the CRFB, says lawmakers will use specific provisions “when it suits their interests and criticize them when they don’t.”

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