If you have been following along with our writings, you know we have been hyper focused on path forward for 2025 tax legislation. I will apologize in advance to introducing you to the grand carnival of legislative budgeting!

Today, we present to you a spectacle like no other: the “current policy baseline” gimmick. Prepare to be amazed as our skilled legislators juggle numbers and projections with the finesse of seasoned circus performers, all while keeping a straight face and not breaking a sweat.

Understanding the Gimmick: A Masterclass in Delusion

The “current policy baseline” gimmick is simple yet brilliant. The core idea?

Change the optics of how we view spending. In the budgetary context we “score” things we want to do based on how much they cost or save us in the future. Sounds reasonable. This is Congress, so not so fast. Under this gimmick, Congress is arguing that since the TCJA provisions are already in the law (forget that they are set to expire this year by prior agreement) they cost us nothing in the future. It is like my ex-wife telling me she overspent last month, so when she does it this month it doesn’t cost us anything more. Huh?

Congress is trying to convince us that somehow spending an additional $4+ trillion dollars costs us nothing in the future because we spent this over the past 7 years. Ignore deficit spending and debt escalation over this period. It is now free, so it can go on forever. God save our children!

Likelihood of Passing the Senate Parliamentarian: A Magical Feat

Our unsung hero of the legislative circus, the Senate parliamentarian. Enter Elizabeth MacDonough to the center stage. Ms. MacDonough has been the Senate parliamentarian since 2012, so not new to the acrobatics of this circus. She must interpret and enforce procedural rules to make sure this gimmick complies with budgetary procedures. Getting this fanciful trick past the parliamentarian depends on several factors:

• Compliance with Rules: Because nothing screams “legitimacy” like adhering to the Byrd Rule (the basis for how reconciliation works to get around 60 votes in the Senate) while maintaining our budgetary fantasies.
• Political Support: Every great illusionist needs a good hype team. Strong support from key senators is essential to keep the dream alive.

Challenges of “Current Policy Baseline” Scoring: A Tightrope Walk

Of course, no great illusion comes without its challenges. The “current policy baseline” approach faces several key issues:

• Revenue Projections: Scoring based on this gimmick will result in revenue projections that differ significantly from reality.
• Policy Uncertainty: Assuming expiring provisions will not be extended can lead to underestimating the fiscal impact and creating a dangerous precedent for how to make law permanent in the future while bypassing the 60 votes needed in the Senate.
• Partisan Disputes: Lawmakers may bicker over whether this approach accurately reflects fiscal impacts, potentially delaying the reconciliation process. We are certain both constitutional and fiscal hawks will have a lot of objections to this maneuver or at least we hope they will.

Changing the Standard: A Herculean Task

For those brave enough to attempt changing the scoring standard, there are a few pathways:

• Legislative Action: Congress can pass legislation to mandate scoring based on “current law.” Good luck getting bipartisan support, though.
• Parliamentarian Rulings: The parliamentarian can interpret existing rules to favor “current law” scoring, but this would likely require a miracle.
• Budget Resolution: The budget resolution can specify the scoring standard to be used, allowing the majority party to influence the process without changing Senate rules. This will be the best path to pull off this trick, but we hope our fiscal hawks are paying attention when comes time to vote.

Conclusion: The Greatest Show on Earth

The “current policy baseline” gimmick is a masterful display of budgetary sleight of hand.

As with all accounting tricks, it comes with great risks. Ask the folks at Enron and Arthur Andersen.

So, sit back, relax, and enjoy the show, because in the world of legislative budgeting, who needs reality when you can have a circus?

We will keep you apprised as this circus continues to unfold before our eye. Please let us know if you have questions regarding the legislative impact on your individual situation.