How the Federal Government Can Get Its Spending Under Control, Justin Bogie / @JustinBogie / Romina Boccia / @RominaBoccia 7/12/16
The federal government has a
spending problem that threatens to swallow up the resources of the American taxpayer
and crush the American economy. Congress can begin to solve this dilemma if it
expands self-imposed restrictions to the part of the budget that is driving the
country toward crisis.
With Congress reneging on its promise to restore regular order and likely heading toward a massive continuing resolution
or omnibus appropriations bill that will bust the Budget Control Act’s
discretionary spending caps once again, it is time for a different approach.
Last week, a House Budget Committee
member, Rep. Mark Sanford, R-S.C., and the Senate Budget Committee chairman, Sen. Mike Enzi,
R-Wyo., introduced the “Penny Plan,” which
would implement an aggregate spending cap beginning in 2017 and “would cut a
single penny from every dollar the federal government spends.”
Under this plan, for fiscal year
2017, the cap would be $3.6 trillion for total noninterest outlays minus
1 percent. For each subsequent year through 2021, outlays would be capped
at the previous year’s level (not including net interest payments)
minus 1 percent. Starting in the fiscal year 2022, and all subsequent
years, total spending would be capped at 18 percent of gross domestic product,
in line with the historical revenue average.
If adopted and Congress failed to
comply with the spending cap, spending reductions necessary to arrive at the
capped level would be enforced by sequestration. Unlike the current form of
sequestration applied to the Budget Control Act spending caps, the Penny Plan
would not exempt any of the programs listed under the Balanced Budget and
Emergency Deficit Control Act of 1985, except payments for net interest. It is important that Congress
reconsider current sequestration exemptions that protect a broad swath of
programs from cuts. This new version of the Penny Plan begins this critical
discussion.
Automatic spending cuts are a blunt
tool to rein in growing spending, and the main drivers of the debt—Medicare,
Medicaid (including Obamacare), and Social Security—are best reformed with
targeted structural reforms that secure benefits for those most vulnerable in
society, while protecting working Americans from undue debt and tax burdens.
Spending caps, enforced with
automatic cuts, serve to motivate Congress to prioritize among competing
demands for resources. Designed properly, caps can curb excessive spending
growth over the long run.
Enforcement by sequestration
promises to spur negotiations to avoid automatic spending reductions in favor
of a more deliberate approach. By not exempting any programs, Congress is more
likely to adopt real reforms to entitlement and welfare programs so that
it can choose how those programs are impacted rather than let the
sequester indiscriminately do so. In the absence of legislative agreement,
sequestration ensures that spending reductions take place regardless of the
adoption of targeted reforms.
In February, The Heritage Foundation
released its “Blueprint for Balance: A Federal Budget for 2017,” the first of a three-part Mandate
for Leadership series that will be published over the course of 2016.
This blueprint provides detailed recommendations for Congress’s budget,
including the adoption of a statutory spending cap. This is one key component
of budget process reform.
To stop out-of-control spending and
growing debt in its tracks, Congress should immediately adopt a statutory
spending cap across all outlays and enforced by sequestration.
When functioning as intended, the
budget process should encourage healthy debate on fiscal issues and begin
negotiations over the tradeoffs and considerations for congressional spending
and taxation. Given today’s broken process, the threat of across-the-board cuts
is an effective tool to bring lawmakers to the table to debate fiscal issues
driving the nation into crisis.
Once the budget balances, spending
should be capped at a level that maintains that balance, only allowing for
certain limited annual adjustments. During periods of normal economic activity
and absent exigent national security demands, the spending cap should grow no
faster than the U.S. population and inflation. The cap should bind more
stringently when debt or deficits exceed specific targets.
The Penny Plan takes a step toward
consideration of a statutory spending cap to limit the growth in government and
improve the nation’s fiscal course. Congress must put the country’s budget on a
sustainable path to secure prosperity for current and future generations, and a
spending cap is one important tool to get there.
No comments:
Post a Comment