Giveaway Season

The budget agreement was an example of good old-fashioned pork-trading.

This holiday season, Congress decided, once again, that it is really important to give. The budget agreement passed in mid-December was an example of the good old-fashioned pork-trading typical of past Congresses - at least until political purity and party warfare became the preferred form of non-governing.

While going back to the future did prevent another government shutdown, it is doubtful the old strategy amounts to responsible budgeting policy.

The bipartisan tax-and- spending Christmas tree has too many special deals under it to list in one, two or maybe even three of these columns. Instead, I will review a few that have significant economic implications.

Maybe the most important element was the lifting of the 40-year-old ban on the export of oil. The original purpose was to limit the potential impacts of oil embargoes. For those of us old enough to remember the 1970s gasoline lines, this was a great idea.

But that was then. The combination of the ban and new domestic production has led to an excess supply of certain types of oil.

Is that good or bad? It depends. The ban, coupled with new domestic production, created an excess supply of certain types of oil. That has kept U.S. crude oil prices below world prices.

Removal of the restriction will open markets for domestic producers and likely lower the cost of oil for foreign users. But that could also mean higher prices in some U.S. markets, as the excess is shipped out of the country.

Oil producers, however, were not the only winners when it came to energy policy. Solar- and wind-energy firms got extensions of their tax credits.

As for tax policy, who won and who lost is in the eye of the tax-benefits beholder.

Whether you think the research and development tax credit is nothing more than a giveaway to big business or the linchpin of domestic competitiveness (it is neither), the idea that the credits had to be renewed periodically was crazy.

To be effective, businesses need tax certainty, and by making the credits permanent, the deal did just that. And in recognition that the benefits were skewed toward larger companies, a break for start-ups was added.

But bestowing tax deals on friends is like eating potato chips: You cannot give just one. Indeed, there were many other tax breaks in the bill. Though some were clearly delineated, lots of others were hidden.

The obvious ones included making permanent or extending breaks such as the child tax credit, the earned-income tax, and tax credits for college expenses, teachers, and charitable donations. The bill reduces or puts off taxes on health-care plans and medical devices. The tax cuts are estimated to cost $650 billion to $780 billion over the next 10 years. That's a lot of potato chips.

Tax breaks, however, were just one side of the agreement. There was also about $66 billion in new 2016 spending, spread evenly between military and non-military budget categories. Again, if you get more money, you love it, but others never like spending to rise.

While the political parties did what they are supposed to do - compromise - the real question is whether this was good budget-making.

That answer is clear: no. The agreement was so large and done, as usual, in the middle of the night with minimal oversight that only the insiders would think this is good government.

But most important, there was no attempt to consider the financial implications of the deal. If you like smoke, mirrors, moving money from one pocket to the other, and other financial gimmicks, you love this deal.

Undoubtedly the agreement will raise the deficit, though that is not necessarily bad. What makes it bad is that politics, not economics, drove the budget agreement. Thus, it is doubtful it will add much to potential future growth.

I guess the more things change, the more they stay the same.