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  • What Do You Call $2.5 Trillion in Spending Cuts? A Good Start

    The new Congress has made spending reduction a priority. This week, Members are getting to work on that promise.

    Yesterday, by a vote of 245–189, the House passed legislation to fully repeal Obamacare. The new health law represents unsustainable new spending, including an expansion of Medicaid and the creation of a new health entitlement. On paper, this massive growth in government is paid for by burdensome new taxes and unrealistic cuts to Medicare. But at the end of the day, Obamacare will explode the deficit, and its repeal is the only fiscally responsible way to move forward.

    Today, the Republican Study Committee (RSC) will advance its promise to cut federal spending and reduce the size of government by introducing the Spending Reduction Act of 2011. Representative Jim Jordan (R–OH), RSC Chairman, visited The Heritage Foundation today to unveil the details of the proposal, of which he is the main sponsor.

    Jordan warned that the United States follows close behind countries like Ireland and Greece on the road to financial crisis. Steps must be taken now to avoid such an outcome. The proposal would cap non-defense discretionary spending at 2008 levels for the remainder of this fiscal year. From then on, the cap would be reduced to 2006 levels. The legislation would rescind unspent stimulus and reduce or eliminate upwards of 50 government programs. Reductions in the federal workforce by 15 percent and a freeze on government employee salaries for five years are also included. More details will be needed to reach the target, but these are good steps toward that goal.

    Altogether, the legislation would create $2.5 trillion in savings over the next decade, significantly reducing the federal budget. But Jordan says this proposal should be seen as the beginning, not the final solution. He also hopes to see enacted the full $100 billion in cuts that were promised by congressional leadership, not a prorated amount as a result of the passing of almost half of the fiscal year. By setting a good, necessary target for the new Congress’s first steps toward controlling spending, this goal sets an excellent precedent for fiscal responsibility.

    Budgets are about setting priorities and making tradeoffs to achieve those priorities. One priority that must be met is keeping America strong, which means adequately funding defense. In its Solutions for America series, Heritage set a goal for Congress to achieve a minimum of $170 billion in annual savings by fiscal year 2012. The $100 billion in non-defense spending is a good start, but more will be necessary. Congress should also reclaim unspent taxpayer funds in unobligated balances of appropriations. They should ensure that future unemployment assistance be offset by spending cuts elsewhere and establish reasonable limits on welfare spending. Finally, it is impossible to tackle runaway spending without transforming entitlement programs—Medicare, Medicaid, and Social Security—so that they operate in a more effective and affordable manner. If nothing is done, these programs will be the source of skyrocketing deficits projected in decades to come.

    The Spending Reduction Act of 2011 is a good first step to putting the nation’s fiscal house back in order. Moving forward, more details will be needed to enact these cuts and additional cuts will have to be made in following years. As Jordan told the Heritage audience, discipline will mean doing what is needed, not what is convenient. This is what the American people expect as a result of the November 2010 elections, and Congress should ensure that it happens.

    Posted in Economics [slideshow_deploy]

    23 Responses to What Do You Call $2.5 Trillion in Spending Cuts? A Good Start

    1. John says:

      Sure is quiet in here…

    2. Pingback: Tweets that mention What Do You Call $2.5 Trillion in Spending Cuts? A Good Start | The Foundry: Conservative Policy News. -- Topsy.com

    3. Bobbie says:

      Excellent start. Good to know we have a congress with integrity to straighten out this country and put her back in decency mode!

    4. Chris Morrish, San J says:

      If your article even started to explain where $2.5 trillion would come from I might be inclined to be less skeptical but as it stands this will most likely fizzle in petty arguments over what's more important than what. Especially if defense is ignored in the process.

      Additionally to think that just because an appeal to a law, that was negotiated by Republicans in the first place, has passed the House that it won't get shot down in the Senate or the POTUS's desk is fool hardy. Not to mention the "Republican alternative" is being crafted by 4 Republicans, as opposed to people who represent all walks of American life.

      To me these are petty partisan games that do nothing but waste the time of the American citizenry. Both Republicans and Democrats should get back to work and focus on specifics, instead of lofty fictitious goals, of: Education, reining in the banks, reining in the corporate monstrosities, promoting small business, and keeping our American landscape clear of crap *yes this refers to environmentalism.

    5. George Colgrove, VA says:

      $2.5 Trillion in “savings” over 10 years with frozen budgets – at start – yes, but not a good one. A final solution this is NOT! I am very disappointed with what I see. I do not see how this reduces the deficit.

      By the numbers

      2011 budget = $3.83 Trillion

      Expected tax revenues (prior to voting for extending the Bush tax cuts) = $2.55 trillion This has been the maximum amount of precious and increasingly scant tax dollars the feds have been able to extort from the struggling American Citizens. In 2010, 28 out of 50 states household incomes went down. I do not believe the feds will be able to pilfer any more than this – I really doubt they will get even this. If they increase taxes, the economy will tank even further and they will pilfer even less. The feds have maxed out their grab on American earning and savings and now they are dipping into American credit cards for their own greed.

      Cuts over 10 years = $2.5 trillion only amounts to an initial cut of $250 billion. They then pat themselves on the backs by praising themselves for savings $2.5 trillion over 10 years. Why not make it more profound by saying they will “save” us $5 trillion in 20 years? This is government speak. We are only cutting $250 billion from the budget and promising that it stays off for ten years. After that let the money flow begin again! Everyone is sounding like this is a $2.5 trillion reduction of the current budget – that would mean the government ends up with $1.33 trillion (a 65% budget reduction!) Though if it were real, I would be very happily surprised! I really do not think what they are proposing will even make up a 10% reduction of the total federal budget.

      Moreover, this is not a savings at all, it is only a small reduction of deficit spending. That is all. It will not save the current taxpayers a single cent – unless you are talking about our great grandchildren. But if this is all we do, they will be paying taxes to another country. The US of A will have long since died.

      Current crippling national debt = $14 trillion

      Here we go, this is what this legislation means:

      2011 New Budget = $3.83T – $0.25T = $3.58 Trillion (which is equal to the budget for 2010 – not 2008 or 2006!)

      This represents non-defense discretionary spending. What this lingo means is that DoD and DHHS will not be targeted for cuts – just the rest of government.

      DoD sucks up $928.5 billion – up by $302 billion in two short years (BTW the 2001 budget for the DoD was just over 300 billion!) – will not be touched.

      DHHS – All entitlement spending (so called mandatory) sucks up $2.15 trillion (Social security Medicaid and Medicare and Welfare) – up by $464 Bbillion in two short years – will not be touched.

      These two departments went up by $766 billion in two short years! These two biggest abusers of the taxpayer trust will consume $3 trillion of the $3.83 trillion budget. Congress is saying these cannot be reduced? Huhhhhh??????

      They are taking the $830 billion left over and reducing that by $250 billion to $580 billion, which may very well be 2006 numbers – who knows.

      So this is what our future looks like with this drop in the bucket “savings”

      2011 cut spending to $3.58 – make off with only $2.55 by the annual tax shakedown – Annual Deficit = $1.03 trillion. Total debt = 14.83 – blew through one debt ceiling.

      2012 Frozen spending @ $3.58T but got only $2.55T (if the feds were lucky) – Annual debt = $1.03T. Total debt = $15.86T Have we gone through another debt ceiling yet?

      2013 spending = $3.58T – Revenue = $2.55T (being very optimistic here) – Annual debt = $1.03T. Total debt = $16.89T

      And so on. By 2021 this legislation will have accumulated $10.3 in debt over the 10 years and will bring our total debt to $24.1T! We did nothing but just ever so slightly slowed the decent into financial chaos.

      This legislation does nothing.

      I will take that $250 billion initial cut, however, please add another $1.03T in ANNUAL cuts and then we can start talking. Just keep in mind reducing federal ANNUAL spending by $1.28T only stops our decent into deeper debt. It does nothing to pay off that debt and it does nothing to lessen the burdens on the taxpayers to spark the economy. To do those things we need to cut more!

      Congress, please stop the lying, stop the obfuscating, and get to serious cutting. This is only a start and not a real good one.

    6. Elaine, Cedar Grove, says:

      I am grateful that the 112th Congress is taking the will of the people seriously.

    7. Tom Sullivan in FL says:

      $2.5 trillion is a drop in the bucket, a joke. The added debt in FY 2010 was $1.65 trillion, and $1.88 trillion in FY 2009, or $3.53 trillion. The total new debt in the next 10 years will be at least $10 trillion.

      We ought to cut the federal government down to 15% of GDP, a 40% cut. We ought to limit federal regulation cost upon GDP from 9% down to 3%.

      Government spending (federal, state, local) is 44% of GDP. Regulation is another 20% of GDP. Total 64% of GDP. That's no different from socialist Europe. We work for the government, they own us. It is time to turn the tables on big government, and make total federal, state and local government no more than 30% of GDP.

    8. Pingback: Must Know Headlines 1.21.2011 — ExposeTheMedia.com

    9. Gabriel says:


      Did you know that the 2002-2003 tax cuts alone will have already added 2.5 trillion to our national debt by 2013? Who is paying for them? You? Is a 2% tax increase for high income earners socialism?

    10. Ken says:

      Agree with Colgrove and Sullivan, right direction, not enough effort, Congress ain't playin' serious ball yet.

    11. George Colgrove, VA says:

      People cannot wrap their arms around the serious nature of federal spending and how much we are going into debt.

      Our current federal spending is $3.83 Trillion!

      That is $319.2 billion per month – The gross domestic product of countries like Iran, Venezuela, Thailand, Argentina, Demark, and Greece (hovering around 28 to 30 in the global GDP rankings)

      That is $73.7 billion per week – Slightly more than what Russia and England spends on defense

      That is $10.5 billion per day – Two Aircraft Carriers

      That is $437.2 million per hour – A typical large town/small city budget

      That is $7.3 million per minute – A bit more than it would take to buy a M1 Abrams Tank

      That is $121,448 per second – Slightly lower than the price of the average house in the midwest.

      Less than a half a second the federal workforce can blow through what it takes the average household to earn in a year ($51,000)!

      We only have an estimate of $2.55 of tax “revenue” for the feds. Meaning we will be using debt to pay the rest. We will be going into debt by $1.28 Trillion in 2011 if we do nothing.

      That is $106.7 billion per month (So far we have $140B, $150B and $80B for the first three months of FY11)

      That is $24.6 billion per week

      That is $3.5 billion per day

      That is $146.1 million per hour

      That is $2.4 million per minute

      That is $40,588 per second

      What this boils down to is that we are going into debt by an expensive car loan each and every second. This year the feds with their infinite wisdom will drive us into debt the equivalent of 31.5 million expensive car loans. Globally, we produce 60 million cars annually at an average price of $10,000.

      An average fed gets paid $123,000 annually. If all goes “well” this year we will only be spending 33% of the budget with debt. This will result in a single federal employee’s salary and benefits driving America into debt by $41,107. 1.5 times what a family of four on the poverty line earns. Every month a federal employee’s salary and benefits are driving the nation’s debt by $3,425 or the price of a modest bedroom makeover. Every week they are driving us into debt by $790 just setting at their desks. That is a nice large flat-screen TV! Every day, they drive the nation into debt by $158 dollars – or a week’s worth of groceries for a poor family of four. Every hour a fed is at their desk, we go into debt by $20 – what it would cost to by dinner for two at a fast food joint. There are roughly 2.5 million or more federal employees.

      This has to stop. What are we getting for this debt? We have long since passes Keynesian Economic theory. We have added $14 trillion over the last decade or more to the economy without that economy growing to compensate. The economy is now broken. Keynesian stated that deficit spending will add necessary dollars to the economy to spark growth. Once growth occurred, that growth would supply the necessary cash to pay back that deficit, then afterwards there would be smooth sailing. Even Keynesian said his theory should not be used long term or indefinitely – but also quipped that he would be long gone anyways so he did not care. We need to stop deficit spending and we need to start paying back the debt before we are consumed by that debt.

    12. Scott Carver says:

      Here's my thoughts on this subject. First of all, people need to get it through their heads that America cannot, cannot take care of the rest of the world. We need to take care of ourselves first and foremost. We need to pull back and strengthen our base. To do this, I would propose the following:

      1.) Afganastan… either stop the pacifistic rules of engagement that are preventing our military from achieving a decisive victory, or simply get the hell out. Nobody, especially fanatical terrorist groups, are going to fear or respect a military that can't shoot first, can't fight if there's a risk of civilian casualties, and is run by liberal polticians instead of officers. Either let our military do what it was trained to do, which is kick ass; or withdraw. I, personally, would prefer that we make the terrorist fanatics of this world fear what would happen if they attacked us again.

      2.) Humanitarian Aid around the World. Don't get me wrong, I'm not against helping those in need, but people, wake up; we cannot afford for our Government to BORROW money from the Chinese and then GIVE IT AWAY to other countries. This is insane. The AMERICAN PEOPLE are the most charitable and giving people in the world. Private citizens donate Hundreds of Millions of dollars every year to disaster relief funds. The United States Government cannot continue to give away money it does not have, especially when most of the money that it does give away ends up going to corrupt government officials instead of the relief efforts to which it was intended. (Haiti is just the most recent case).

      3.) We need to bring Industry back to the United States. Manufacturing, Textiles, Automotive, Aerospace, etc. We need to give tax incentives to companies that are located in the United States and who employ American CITIZENS. And we need to have tax penalties for companies that ship jobs and manufacturing facilities overseas.

      4.) We need to break the unions. The unions were a good idea in the day, but their leadership has become all about power. They have degenerated into nothing but a bunch of thugs that their leadership sells to the highest bidder. (SEIU, UAW,etc.) They use thier POLITICAL power to demand wages, benefits, and other concessions that the market cannot support. They use political clout to force through rules and regulations, and then demand that they be exempt from those same rules. And they use physical force and intimidation to force the private sector to accept their demands. They are the main reason why our manufacturing and industrial base cannot compete with overseas competition. Break the unions, and the increase in employeed, tax-paying citizens will generate a huge new surge in revenue for the Government.

      5.) We need to secure our Borders and return any persons who have entered this country illegally to their native lands. The best way would be to get them to return voluntarilly. This could be accomplished by cutting all entitlement programs for persons not U.S. Citizens. Then offer a grace period where any person who turns themselves into ICE or the Border Patrol, will be given transportation back to their home nation, where they can then apply for legal immigration. But make it clear, any person in this country illegally after the grace period, WHEN CAUGHT, will be arrested, deported, and will NOT be allowed to apply for legal immigration, EVER.

      6.) Do away with all the regulatory agencies that seem to have no other agenda then to make doing business in the United States as difficult as possible. (EPA, FCC, TSA, etc.) These agencies do nothing but drive up the cost of business by regulation. They have gotten out of control. If they want something, and can't get it through legislation, they do an end-run around the will of the people by making it regulation. These agencies either need to be leashed back to their original mandate, which was the PROTECTION of the American Citizens, or they need to be done away with. These agencies were charged with ensuring the protection of the American Citizens, not enforcing some Utopian agenda on us.

      These suggestions may seem a little estream, and a little harsh to some of you, but it's time we make the harsh decisions. Our country is collapsing around us, and unless we do something, soon, it's not going to survive. So, what's it going to be? Do you want to live the American Dream; where you can say what you want, think what you want, worship where you want, and have a chance; a real chance, at getting ahead in life? Or do you want to go the way of Greece, with total economic chaos and riots in the streets? Or would you prefer China's path, where everthing is the property of the Government, and you only get what they allow you to have.

      Make your choice, and make it soon. Because if you don't, someone else will make it for you.

    13. Pingback: House and Senate Cloakroom: January 24-28, 2011 | The Foundry: Conservative Policy News.

    14. Bobbie says:

      Tax cuts do not add to a deficit unless it's designed to. Tax cuts is taking less taxing out of another's EARNED income. Which means proper government works with less, instead of hazardously causing more.

    15. Gabriel says:


      Wait, did you actually just say that tax cuts do not add to the deficit? Who pays for programs when federal revenus is low? Who is paying for the tax cuts? You? Every single time in U.S. History that tax revenue's have increased we have had higher job creation, lower unemployment and lower deficits which slows the National Debt Increase. Here is the evidence and sources….

      -everytime a Conservative/Republican President and Congress takes power, unemployment goes up. Throughout history Conservative/Republican power has raised unemployment by an average of 1.6%. Democrat power has lowered unemployment by an average of 2.3%. Just recently Bush increased the unemployment rate by 3.5% during his two terms. Obama has increased the rate by 1.9%. You can find unemployment rate history at http://www.miseryindex.us/urbymonth.asp. See it for yourself! These unemployment figures line up with the marginal tax rate increase and decrease throughout history that you can find again, at http://www.taxfoundation.org/publications/show/15….

      -everytime a Conservative/Republican President and Congress takes power, job creation is lower, every single time. Throughout history Conservative/Republican power has created a total of 39.58 million jobs with an average annual increase of 1.4%. Democrat power has created 69.50 million jobs with an average annual increase of 3.1%. Bush is accountable for over 700,000 jobs losses a month at the end of his second term. Obama has had continued job loss up until this summer. Infact October and Novemer combined accounts for around 275,000 jobs created, partially due to the stimulus. You can find job creation history at http://en.wikipedia.org/wiki/Jobs_created_during_…. These job creation figures also line up with the marginal tax rate increase and decrease throughout history at http://www.taxfoundation.org/publications/show/15….

      -for deficit increase and decrease just go to treasurydirect.gov and do the research yourself…

      Bobbie, you never answered my question- Is a 2% tax increase for high income earners socialism? waiting…

    16. Bobbie says:

      What programs, Gabriel? wait, you didn't just say that did you? Who's gonna pay for all the programs? Who is paying for the tax cuts? That is a totally, rhetorical question. It doesn't make sense! You're just begging for government control.

      Every single time in U.S. History that tax revenue’s have increased, it's taking more from the private sector. The last thing this country needs is higher government employment for more government control. Gabriel, what higher job creation have democrats created? Be specific. Your evidence is a cover-up without details so you're narrow thinking will blame anyone you feel like.

      Gabriel you say: every time a Conservative/Republican President and Congress takes power, job creation is lower, every single time. Be specific. When unemployment is low, it doesn't require job creation. It isn't the job of government to employ us.

      I want to know the specific names of employment democrats have created. Democrats tax paying job creation consists of subsidies which does not account for economic freedom. Government over regulates and burdens businesses which results in the closing of them and increases unemployment. Do you appreciate that? Why do you insist government create the jobs, Gabriel? Why not insist they stop over regulating? You must be a government make-work employee, eh?

    17. Bobbie says:

      last paragraph add-on:

      which does not account for economic freedom or economic growth.

    18. Bobbie says:

      Oh, to answer your question as your impatience shows, "Is a 2% tax increase for high income earners socialism???"

      A 2% tax increase for high income earners, is a 2% tax increase to high income earners.

    19. Gabriel says:

      You didn't answer a single question once again. Let me try this one more time..

      Do you actually think that tax cuts do not add to the deficit?

      Do you believe that Bush tax cuts did not add to the national debt?

      Who pays for programs when federal revenue is low?

      Who pays for tax cuts for the rich, transportation, defense, security, ffa, fda, education, emergency services, national welfare, unemployment benefits, etc.?

      Who is paying for these programs, you?

      Is it possible for you to answer a single question? You cant ask any questions until you have first responded to the questions that I already asked, which you never, ever do. Instead of the same old conservative talking points do you have any economic data, job creation numbers, unemployment percentages, etc. I provided a comment with actual sources that show which tax policies and which political party has a better track record when it comes to lower unemployment and higher job creation. Nothing can spin the information I provided, its historical evidence already in the books. Sorry, cant change history.

      "Gabriel you say: every time a Conservative/Republican President and Congress takes power, job creation is lower, every single time. Be specific. When unemployment is low, it doesn’t require job creation" -Let me try this in lamens terms. When Conservatives/Republicans are in power, unemployment is higher and less jobs are created, which results in a suffering economy. Its that worded well enough for you? Your asking me to be specifics when you have provided nothing but talking points and personal attacks, haha, please. so if unemployment is low job creation can hault?

      "Why not insist they stop over regulating"-explain in detail what is being over regulated?

      "A 2% tax increase for high income earners, is a 2% tax increase to high income earners" -so why couldn't we let the bush tax cuts expire? they are a large part of our current deficits are they not?

      Have you studied or researched anything regarding job creation, unemployment and economic history?

    20. Frank, Florida says:

      I agree with George above: a $2.5 Trillion budget cut over 10 years is a start, but not a good start. The Republicans in Congress, for the most part, still haven't grasped the magnitude of our financial crises or the urgency to make MASSIVE cuts ASAP! I'm giving our nation 2-5 years max, before we hit a "tipping point" that will lead to an inevitable catastrophic financial meltdown. In fact, it may already be too late. Alan Greenspan recently lowered his opinion from 10 to just 5 years for us to turn things around. But nobody really knows for sure.

      We need to cut $1.5 Trillion off the budget this year PLUS another $100 Billion (at least) to show the world we are serious about paying down the debt by that amount EACH YEAR… MINIMUM!! Even then, it would take us $14,000 Billion/$100 Billion/year= 140 years to repay the debt. But if we never make a serious effort SOON to begin to repay the debt, the US Dollar will lose its status as the world's reserve currency. This will lead to a massive world-wide "dumping" of Dollars for whatever the new world reserve currency will be and a sudden collapse in the value of the Dollar. The USA will become like a Third World banana republic.

      Time is running out (might have already run out). Come on Congress, get serious about our Federal debt!! The clock is ticking.

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