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Discretionary Spending Caps, A Good First Step

Posted By Stephen Keen On January 20, 2010 @ 5:53 pm In Economics | Comments Disabled

After quietly increasing [1]the federal debt limit [2]from $12.1 trillion to $12.4 on Christmas Eve, the US Senate is beginning debate today [3]on yet another increase. Hoping to avoid making the skyrocketing debt levels [4]an election issue; this time around they want to pass an increase large enough to feed their appetite through 2010. While the ever increasing mountain of debt is not welcome news to many, there is a glimmer of hope that the nation will someday return to a fiscally sustainable track.

Senator Jeff Sessions (R-AL) and Senator Claire McCaskill (D-MO) are expected to introduce an amendment to the debt limit bill that would: 1) Cap discretionary spending growth at approximately two percent per year, 2) Specify spending levels for defense and non-defense programs, and 3) Require a two-thirds vote to waive the annual caps.

While this alone would hardly solve the nation’s fiscal problems it would represent an encouraging start. Unfortunately, the remaining two-thirds of the budget labeled mandatory spending on the entitlements Social Security, Medicare, and Medicaid is ignored even though it will swamp the entire federal budget by 2052. [5]

Over the past three years Congress increased regular discretionary spending [6] by 25 percent, from $873 billion to $1,090 billion [7], not including the $311 billion in “emergency” discretionary spending provided by the “stimulus” bill for FY10 or any spending related to the Global War on Terrorism. In short, essential programs are hardly starving for funding.

Further, Congress has already passed the budget resolution which set discretionary spending increases at 2 percent per year over the next five years. The problem is the budget resolution is non-binding, which the Sessions-McCaskill amendment is designed to fix.

While passage of the amendment isn’t a comprehensive solution to our nation’s fiscal problems, it would be a good step forward. However, truly successful fiscal reform must address entitlement spending.

First, Congress must own up to the government’s long-term obligations for Social Security, Medicare, and Medicaid benefits, which total approximately $45 trillion [8], by including these figures in the budget. In every year of delay the long-term cost of reform rises by roughly $2 trillion.

Second, Social Security, Medicare, and Medicaid should be put on long-term budgets. Currently these programs are permitted to grow on auto-pilot without any consideration for the threat they pose to our nation’s financial future. [9]

Although the Sessions-McCaskill amendment excludes these important entitlement reforms, restraining any portion of government spending would be a significant accomplishment.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/01/20/discretionary-spending-caps-a-good-first-step/

URLs in this post:

[1] quietly increasing : http://www.foundry.org/2009/12/01/shhh%E2%80%A6congress-is-raising-the-debt-limit/

[2] federal debt limit : http://www.youtube.com/watch?v=7yJRci2pARk

[3] beginning debate today : http://voices.washingtonpost.com/44/2010/01/senate-delays-vote-on-raising.html?wprss=44

[4] skyrocketing debt levels : http://www.facebook.com/album.php?aid=126832&id=21375324480

[5] swamp the entire federal budget by 2052. : http://www.heritage.org/research/features/BudgetChartBook/Entitlements-Alone-Eclipse-Historical-Tax-Levels-by-2052.aspx

[6] discretionary spending: http://www.heritage.org/federalbudget/mandatory-discretionary-spending

[7] from $873 billion to $1,090 billion: http://www.heritage.org/Research/Budget/wm2728.cfm

[8] approximately $45 trillion: http://www.heritage.org/Research/SocialSecurity/wm2458.cfm

[9] financial future. : http://www.heritage.org/Research/Budget/upload/takingbackourfiscalfuture.pdf

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