House Ways & Means Committee Chair Dave Camp (R-MI) has a plan for what to do with scores of now-expired tax subsidies that are sitting in Congress’ lap. He wants to review each one on its merits and either make it permanent or (by implication at least) kill it. Camp is on to something, although his strategy would have some very important—though complicated and troubling-- political and fiscal consequences. Camp’s strategy puts him at odds with Senate Finance Chair Ron Wyden (D-OR), who wants Congress to quickly restore all the expired provisions for a year or so. And Camp’s schedule, which anticipates a long round of hearings and mark-ups, pretty much guarantees that Congress won’t act on these mostly business subsidies before the November elections. I’m mostly with Camp on this one. My TPC colleague Donald Marron cleverly—and accurately—refers to the temporary provisions as tax expirers, not tax extenders. In fact, they've been off the books since last Dec. 31(making them the tax expired, as it were). And Congress ought to treat each just like any proposal for a new tax cut. Hold a hearing, decide whether it passes equity and efficiency tests, and pay for it. Camp promises to do most of that—except for the all-important pay-for-it part. No promises there. And that’s where he and I part company. By making these subsidies permanent, Camp would put all the restored tax breaks in the long-term budget baseline. The cost of doing so would be dramatic—roughly $900 billion over 10 years, according to the Congressional Research Service. Permanently restoring some of these subsidies would make the real long-term fiscal price transparent, but only if Camp offsets the cost with specific tax increases or spending cuts. This is especially important because it has huge implications for tax reform. In effect, it would make a big chunk of that $900 billion available to pay for tax rate cuts. To see how, let’s walk through the intricacies of budget scoring. For decades, lawmakers manipulated the system by continuing these tax breaks one year at a time--and only occasionally paying for them. Because the Joint Committee on Taxation provides a 10-year score for all legislation, lawmakers could spread the cost of a one-year extension over a decade, making it seem far cheaper than it really was. This bit of legerdemain has been critical for pols who wanted to avoid paying for the tax cuts. After all, it is a lot easier to explain away adding $50 billion to the deficit over 10 years (the cost of restoring the expired provisions for one year only) than adding $900 billion (the cost of resurrecting all the same breaks for a decade). And, of course, they’ve done this year-after-year. But making the tax cuts permanent would turn this practice on its head. If you want to do broad-based tax reform, as Camp does, you need the full 10-year cost of these subsidies in the baseline. Why? Because when you need to pay for tax rate cuts, you’ve got up to $900 billion (depending on which cuts are made permanent) instead of a mere $50 billion. Think of it as fattening a pig before you slaughter it. But Congress still has to pay for restoring those tax cuts. Rolling them into the long-term baseline does not make their cost disappear. We have to borrow the same $900 billion to pay for them. Making some of these tax breaks permanent would have significant consequences. The folks at the Committee for a Responsible Federal Budget took a close look yesterday at one—a measure that allows firms to take very generous first year tax deductions for the cost of new plant or equipment. This was supposed to be a temporary tax break aimed at stimulating the economy after the Great Recession. But even though many firms are swimming in cash and business investment is strong, lawmakers want to bring back this “bonus depreciation.” A one year restoration would add about $5 billion to the 10-year deficit. But CRFB estimates that making it permanent would add $300 billion in red ink over 10 years. Camp is right to put the real 10-year cost of these tax preferences in the budget baseline. But Congress’s review of their merits needs to be more than perfunctory. And any restoration of these subsidies needs to be paid for. Doing any less would merely substitute one budget gimmick for another.