The worst of both worlds.

• Author: Blahous, Charles
• Position: Budget cuts

Without legislative action, millions of Americans' tax bills will suddenly rise and federal spending will be suddenly cut. Many economists believe that allowing all this to happen simultaneously will have severe adverse economic effects, possibly plunging the nation back into recession.

We are in this situation primarily because elected officials have become addicted to inserting "sunset" provisions into laws they don't actually intend to terminate. This is a classic game-theory conundrum in which the players all face incentives to do the wrong thing, despite knowing that the end result is bad for everyone.

Political pressure and congressional "pay go" rules, which require revenue increases or cuts elsewhere in the budget to offset new spending or tax reductions, serve as impediments to laws that transparently add to the deficit. So instead of admitting that many policies we favor do add to the deficit, we pretend that they will only be with us briefly and that their budget effects can be painlessly counteracted with minor offsets.

The result is the worst of all policy worlds. Any positive economic effects of tax relief and government spending are undercut, as both taxpayers and beneficiaries lack certainty about whether, when, and how existing policies will be extended. Meanwhile we have a false picture of our fiscal situation, which forces government scorekeepers to keep two sets of books: one for what current law says and another representing their predictions of what Congress will actually do (namely, keep adding temporary extensions to allegedly sunsetting laws).

The president, whoever he is, would do the nation an enormous service if he began his term by leading a successful bipartisan effort to end this proliferation of temporary policies. Any further short-term extensions of these laws should be coupled with realistic permanent schedules to replace them. The worst possible scenario, which some analysts have advocated, would involve doing the...