Concerns grow about lame-duck appetite to stop steep budget cuts – JP


Student loan origination fees, which advocates call a “hidden student loan tax,” could rise sharply at a time when Democrats are trying to ease student debt burdens.

Hitting the deficit brake, in theory

The 2010 pay-as-you-go law was enacted to try to impose some fiscal restraint on lawmakers as part of a measure raising the statutory debt ceiling.

Under the law, the White House budget office tallies up the net deficit increase enacted each year over both a five- and 10-year period, and takes the greater of the annual impacts, typically the five-year number. The Office of Management and Budget then figures how much would need to be cut from each program to eliminate the following year’s portion of that deficit increase.

During the 2021 legislative session, for example, the OMB counted a net $1.85 trillion deficit increase over five years, and $1.87 trillion over 10, mostly resulting from the massive pandemic relief law. That worked out to $370.6 billion in required cuts each year for five years, which is greater than the $187 billion for each year over a decade and thus is the amount that would have to be cut annually.

The OMB then sends out an order triggering across-the-board cuts, known as a “sequester,” starting 15 days after the end of the previous session. For this year, that would have meant cutting $370.6 billion from a broad swath of “mandatory” programs, or accounts that don’t rely on annual appropriations, if Congress hadn’t stepped in.

Las Vegas News Magazine

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