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Telling Congress to Reduce the Deficit by Cutting Spending

Posted By Kathryn Nix On June 24, 2010 @ 10:00 am In Economics | Comments Disabled

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On Saturday, June 26, America Speaks will host a national town hall meeting [2] in which any and all Americans will be able to voice their opinions on the federal budget and the devastating effects that Washington’s growing deficits will have on the U.S. economy.  The discussion will focus on ways to address the fiscal crisis [3] before it is too late.

Federal deficits are growing due to increasing spending, not because of a lack of revenue.  Heritage budget expert Brian Riedl explains in a recent paper [4]:

The composition of spending has shifted dramatically from defense to entitlements, yet total spending has nearly always remained within 2 percentage points of 20.3 percent of GDP…Revenue stability should continue…Yet spending stability has ended. Baseline spending is projected to leap to 23.7 percent of GDP by 2015 and to 26.5 percent by 2020—levels not seen since World War II.

Because of this, solutions to the federal government’s unsustainable fiscal behavior should focus on reducing spending, not raising taxes. There are plenty of ways to do this, which include, but are not limited to, the following:

  • Reform Entitlement Programs. The single most important thing Congress can do to reduce deficits is reduce entitlement spending on Medicare, Medicaid and Social Security.  Currently these programs grow on autopilot and will continue to do so [5] as baby boomers retire. Congress should put them on a sustainable path by establishing long-term budgets to control spending.
  • Cap Spending. Earlier in the year, President Obama proposed capping non-defense discretionary spending.  This alone would have a minor effect on the deficit because entitlements are the main driver of spending, but Congress could go further by capping all federal spending at 20 percent of gross domestic product (GDP), the historical spending average.  Spending caps would force lawmakers to make trade-offs and to prioritize spending initiatives.
  • Eliminate Wasteful Spending. Although earmarks and wasteful spending alone are not enough to close the budget gap [6], Congress must demonstrate it is serious about budget reform by eliminating unnecessary expenditures of taxpayer dollars. In Heritage’s 2010 edition of Federal Spending by the Numbers [7], Riedl points to plenty of areas where spending could be effortlessly reduced by eliminating outdated, ineffective, or duplicative programs and cutting other waste.

Many of these ideas are encapsulated in the Spending, Deficit, and Debt Control Act authored by Representatives Paul Ryan (R-WI) and Jeb Hensarling (R-TX), which Riedl explores here [8] and the authors themselves discuss here [9].

The take home point here is that reducing spending is possible, necessary, and sufficient to put the nation’s fiscal house back in order.  To learn more about participating in the AmericaSpeaks’ discussion this Saturday, June 26, click here [2].


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

URL to article: http://blog.heritage.org/2010/06/24/telling-congress-to-reduce-the-deficit-by-cutting-spending/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/capitol-10-6-24.jpg

[2] national town hall meeting: http://usabudgetdiscussion.org/

[3] ways to address the fiscal crisis: http://www.heritage.org/Research/Factsheets/Enough-Is-Enough

[4] recent paper: http://www.heritage.org/Research/Reports/2010/06/The-Three-Biggest-Myths-About-Tax-Cuts-and-the-Budget-Deficit

[5] will continue to do so: http://www.heritage.org/budgetchartbook/entitlements-historical-tax-levels

[6] spending alone are not enough to close the budget gap: http://www.heritage.org/budgetchartbook/spending-cuts

[7] 2010 edition of Federal Spending by the Numbers: http://www.heritage.org/Research/Reports/2010/06/Federal-Spending-by-the-Numbers-2010

[8] here: http://www.heritage.org/Research/Reports/2009/10/The%20Spending%20Deficit%20and%20Debt%20Control%20Act%20Would%20Help%20Congress%20Rein%20in%20Spending%20and%20Deficits

[9] here: http://www.washingtonexaminer.com/opinion/columns/We-need-to-cut-spending-now-96923989.html

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