At the end of last year, lawmakers enacted a temporary two-month extension of several policies set to expire, including the temporary payroll tax holiday, expanded unemployment insurance, the doc fix, and various health provisions. Encouragingly, the $33 billion cost of the extensions was fully offset over a ten-year period and a Conference Committee was appointed to determine how any further extensions would be treated.
As the Conference Committee works to address these expiring policies, it should strive to focus on long-term solutions as opposed to short-term patches. Ideally, the Committee should view the extensions of these policies within the broader economic and fiscal context, using them as an opportunity to advance a comprehensive fiscal plan.
Structured correctly, such a package can have a positive short and long-term economic impact, providing certainty to businesses and individuals and putting the country on a more sustainable path.
To achieve this, the Conference Committee should:
- Include policies to put in place, or move the country toward, a comprehensive plan to stabilize and reduce long-term debt.
- Ensure that the costs of any extensions are fully offset over a five to ten-year period.
- Put in place permanent solutions for expiring provisions where appropriate.
The Conference Committee should not:
- Make temporary stimulus or job creation measures permanent, or make it easier to continue extending them in the future.
- Dismantle the sequester or otherwise add to the deficit.
- Rely on budget gimmicks for offsets.
Click here to read the full paper on CRFB.org.
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