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  • Super Failure: No Spending Cuts, and the Debt Keeps Rising

    With the failure of the super committee to recommend at least $1.2 trillion in deficit reduction, Congress’s latest attempt at budget control has collapsed. There will be many analyses of why the process did not work, but it’s worth stepping back to recall what generated the need for this extraordinary procedure and what the exercise actually produced.

    From early in the year, it was generally accepted that the divided Congress would be unable to agree on a budget through regular procedures. Republicans chose to use a necessary vote on the debt limit to force the Administration to face the need for spending reductions. After a summer-long debate, rife with hyperbole about a potential government “default,” the Budget Control Act of 2011 (BCA) was born, crafted in a way that at face value expressed the goal of fiscal prudence.

    The BCA both imposed a set of discretionary spending caps to limit annually appropriated spending and established the super committee to recommend policies that would reduce the deficit by at least an additional $1.2 trillion through 2021. In return, the BCA included debt limit increases in three tranches: $400 billion, $500 billion, and then $1.2 trillion, as the chart below illustrates.

    The debt limit hikes were ostensibly contingent on deficit reduction and a vote on a balanced budget amendment to the Constitution. But in fact, under the language of the BCA legislation, they could be blocked only if Congress passed a joint resolution of disapproval. If passed, such a resolution would be subject to a presidential veto, requiring the usual two-thirds vote of both houses to override. Thus these debt ceiling increases up to $2.1 trillion were all but assured from the beginning. (Article continued below chart)

    The first two increases totaling $900 billion have already occurred, and the debt limit now stands at an astounding $15.124 trillion. It is up from the $14.29 trillion limit set in early 2010 and follows a history of frequent and growing debt limit increases, as shown in this Heritage Budget Chart Book chart. (Article continued below chart)

    The third increase of $1.2 trillion—projected to occur early in 2012 when the debt begins to again encroach upon the limit—would raise the debt limit to an unprecedented $16.324 trillion, or over 100 percent of GDP.

    Thus, the debt limit will climb ever higher, accommodating the profligate spending of the President and Congress. As Heritage’s J. D. Foster wrote in January: “The need to raise the debt limit reflects an intention to continue deficit financing” and should signal to Congress that it should urgently reexamine its current policy decisions.

    Policies that promote reckless spending—forcing the government to borrow about 40 cents of every dollar it spends, while pushing total debt past 100 percent of gross domestic product (GDP)—are flat-out irresponsible. This upward trajectory makes it crystal clear that the government’s spending priorities have deviated severely from what the Founders laid out in the Constitution.

    Equally disappointing, both the existing spending caps and the automatic enforcement in the BCA are less than advertised. The caps contain flaws that may make them all but meaningless. The “sequester” mechanism that would impose spending cuts will not be triggered until January 2013, giving Congress plenty of time to rewrite or abandon it.

    As The Heritage Foundation’s David Addington writes, “The overspending problem is still here. Congress must still act to get the federal spending under control, in a thoughtful, intelligent manner that meets the needs of the American people.” It should do this without succumbing to pressure to hike taxes on Americans and further weigh down an already struggling economy. Remember, the problem is Washington’s spending.

    Congress should demonstrate that it is serious about tackling the problems of rising spending, debt, and deficits. That means reforms to Medicare, Medicaid, and Social Security; transforming the maddeningly complicated tax system; and reducing the size and scope of government. In Saving the American Dream, The Heritage Foundation offers the kinds of bold solutions needed to put America back on a path toward fiscal sustainability and economic prosperity.

    Posted in Economics [slideshow_deploy]

    7 Responses to Super Failure: No Spending Cuts, and the Debt Keeps Rising

    1. Brian says:

      Hmmm…if you look at the Heritage chart, and then this link (http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms), it seems like your biggest spenders have historically been Republican presidents.

      Not to justify Obama, because he's spending WAY too much. But where were all of these people so concerned with the deficit when Reagan, Bush 41, and Bush 43 were driving up the national debt?

      • Emily Goff says:

        Thanks for your comment, Brian. I'd encourage you to check out a few pieces Heritage has published. The first is this chart: http://blog.heritage.org/2011/10/05/in-pictures-d… that shows how much debt has increased as a percentage of GDP by President. Yes, past presidents and Congresses have spent irresponsibly at times too. During them all, The Heritage Foundation firmly stood for fiscal prudence and responsible budgeting – just as it does now. Now more than ever we work to analyze both the good and the poor fiscal policy decisions made, exhorting Washington's leaders to be strong advocates of a more limited government and to be judicious users taxpayer dollars.

        • Bobbie says:

          more tax payers, less welfare dependency. how do they equate influx of immigrants living with or without government dependency? what percentage of immigrants pay the taxes obligated to American born? what percentage of immigrants are free and living independently as they impressed upon us over twenty five years ago was their desire?

      • Lyn Parrott says:

        Per the constitution, the President proposes a budget but it's up to Congress to approve it and authorize spending and collect the money to pay the bills. Bill Clinton proposed and got deficit spending in '92. Then Newt Gingrich and House Republicans balanced the budget four years in a row. Gingrich seems to be the answer to the current problem, if you look at history.

    2. Lawrence Burnham says:

      That the "super committee' would fail was predicted at the very beginning. They bwhere ment to fail. No surprises there. It would appear that both democrats and republicans are joined together in the drive to increase spending, thus increase taxes. I have not seen one republican stand up for America and the Constitution. I feel that the ONLY way to stop the democratic regime's spending spree and blatant disregard for the constitution and rule of law is for supposedly concerned Republican leaders to stand up on two legs and put a stop to this instead of their current cowardly behavior and fear of offending the president. We need leaders with courage and faith in America. Not the current crop of want to be's!

    3. Mike, Wichita Falls says:

      How can the debt ceiling be raised by $1.2T only after that much in cuts takes place if the debt ceiling raise is slated for 2012 but the cuts are slated for 2013-2022? We know that these "cuts" are only a reduction in growth of spending not spending, about $10T in additional debt versus about $11T over the next ten years, and can easily be repealed by future Congresses and Presidents.

      Obama has warned Congress not to tinker with these automatic cuts to give people the impression that he is serious about spending cuts when he really just wants the additional spending authority.

      Now that our debt exceeds 100% of GDP, the GOP should be able to defend their "no new taxes" pledge. Uncle Sam now needs to take 100% of the economy for at least one year just to pay off the debt. Who will work at all after that law passes? We'll look back fondly on the days when unemployment was only 9%. How will Uncle Sam pay for $60T in unfunded liabilities? How will He pay for Obamacare? How will He defend this nation?

    4. Lloyd Scallan says:

      It's almost impossible to believe that anyone actually thought this "supercommittee" would reach an agreement on anything. Now, many of those that told us great things would come out of this collection of leftist and RINOs, are running for away from their misguided predictions. More disturbing are those out there that are still putting faith in this Congress that they would "demostrate they are serious about tackling problems". Anyone that is either that naive or brain dead is a prime example as to why this nation is sliding into the abyss of socialism. Fact facts, until we have the power to force Congress to do what is best for all of us by establishing at alterative to the two party system, nothing will change.

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