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Building a Bigger US Government Budget Window for Economic Growth

Man builds a wider window while another looks on, thus symbolizing the building of a bigger US government budget window

Donald Trump was sent to Washington for a lot of reasons, not the least of which was major tax reform—a relevant factor in the US government budget. He promised to reduce income tax across the board, abolish the death tax, and do a complete overhaul of the system in order to make taxes simpler and fairer.

Business particularly dislikes uncertainty.

One of the largest obstacles to implementing Trump’s tax reform through the budget reconciliation process is the arbitrary budget window put in place back in 1974. Reconciliation, often referred to as the Byrd Rule in honor of the late Senator Robert Byrd, was established by the Congressional Budget Act of 1974. The premise of Reconciliation is that tax package must pay for themselves in the budget window period covered. The budget window must be passed to last at least 5 years.  And that the period of time the bill covers is known as the “budget window”. Officially, there is no requirement limiting the size of the said window.

At this time, many pundits and politicians claim that the 10-year Budget Window is some sort of a time-honored tradition dating from the founding of our country. Well, it’s not. The Budget Window has bounced around from 5 to 7 years for decades. The first year that we ever had a 10-year Budget Window was 2000. Before the 10-year period was over, it was changed to a 7-year period.

Grover Norquist, president of the Americans for Tax Reform, and David McIntosh, president of the Club for Growth, recently published a compelling opinion piece in the Wall Street Journal.  Their piece, “Tax Cuts that Last-With 51 Votes” makes the case that an increased budget window would greatly improve economic conditions and enable more certain and needed tax reform.  Bold Business endorses their position.

On the US Government Budget: Is the Budget Window Fun and Games to Congress?

These shenanigans might be all fun and games on Capitol Hill, but this kind of uncertainty has consequences in the real world. Primarily, it costs the country a great loss in economic growth. Businesses need to make long-term decisions, and that requires reliability. The private sector values certainty and long-term stability. If Congress can’t agree on lowering taxes, at the very least they should be able to agree how long a bill will be in effect for. 

a photo of Capitol Hill where the US Government Budget Window is set
Only 51 votes are needed to extend the budget window.

A 25-year timeline for tax proposals would make a larger impact on America’s debt ceiling. Given a particular set of circumstances, the business community can adapt and grow. But in chaos, with constantly changing rules, regulations, and taxes, it is almost impossible for a business to chart a course. Twenty-five years also allows changes to stick, rather than be changed immediately by the next presidency. Republicans have recently been very optimistic in their messaging concerning tax reform.  House Speaker Paul Ryan, R-Wis stated at the 2017 Manufacturing Summit in Washington, D.C.: “Once in a generation or so, there is an opportunity to do something transformational—something that will have a truly lasting impact long after we are gone.” Expansion of the budget window would enable this possibility.

Indeed, long-term planning in both small and large businesses would be enhanced by increasing the Budget Window to 25 years. The increased predictability and stability would be a positive benefit to businesses all across the country.  Let’s hope the Republicans get out their tools and hammers and build the country an “expanded budget window”.

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