Cutting Costs Cutting CostsCutting Costs
Inside the effort to improve the efficiency of federal operations.

In the Budget Debate, Even the Definition of Spending Is Up for Grabs


If you need a sign that Washington is going to have a tough time breaking its gridlock on the budget, look no further than the fact that Democrats and Republican can't even agree to the terms of the debate. 

For a while now, a so-called "grand bargain" on long-term deficit reduction has seemed elusive, though President Obama still hopes it can be achieved. The president plans to have dinner with about a dozen GOP senators on Wednesday night in an effort to revive talks and has plans for a rare trip to Capitol Hill next week. Republican Senator Lindsey Graham described it to The New York Times as "probably the most encouraging engagement on a big issue since the early days of his presidency." It's a promising development for proponents of deficit reduction, but a huge amount of distance remains between the two sides.

Democrats see no way of reducing the nation's annual deficits without both cutting spending and generating new revenue. But Republicans say Democrats already got a concession on revenue at the beginning of the year, when Congress voted to let upper-income tax cuts expire as part of a fiscal cliff deal, raising roughly $620 billion over 10 years. House Republicans say revenue should be off the table and that the focus should be solely on spending cuts. 

The difficulty the two parties will have in reaching a compromise was on full display at Tuesday's Senate Budget Committee hearing. Democrats wanted to explore how to raise money by eliminating tax loopholes. Republicans took issue with the very premise of the meeting.

The committee’s Democratic chairwoman, Sen. Patty Murray, kicked off the Tuesday hearing arguing that “finding savings from unfair tax provisions is an opportunity to responsibly reduce our deficit.” But, to the committee’s top Republican, that argument was based on misguided reasoning.

“The title of the hearing, ‘Reducing the Deficit by Eliminating Wasteful Spending in the Tax Code,’ really suggests how much disconnect we have,” ranking member Sen. Jeff Sessions said in his opening statement.

“When you allow a person to keep money that they earn because of a certain deduction, for charitable or mortgage or healthcare payments, I don’t believe that’s spending by the United States government,” he said. Tax breaks shouldn’t be seen as an untapped revenue source, he and other Republican senators argued. Eliminating a tax break is just a tax increase. “You can’t spin it any other way,” Sessions said.

But Democrats argue that some loopholes are a form of spending through the tax code. That’s because they can serve the same purpose. Need-based federal grants for college and subsidized childcare are no different from tax-deferred college savings accounts or the childcare tax credit, argued Jared Bernstein, a former top economic advisor to Vice President Joseph Biden and one of the hearing’s witnesses. “If you believe we have a spending problem, you should also believe we have a tax expenditure problem,” he said.

Russell Roberts, a research fellow at the conservative Hoover Institution, who testified at the hearing also expressed discomfort with the phrase “tax expenditures,” but he suggested an alternative. “‘Special deductions’ may be a better phrase,” Roberts offered.

(Image via PutilichD/

Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security


When you download a report, your information may be shared with the underwriters of that document.