12.31.2010 0

Spending Cuts Have to Start Somewhere

  • On: 01/24/2011 09:00:35
  • In: Fiscal Responsibility
  • By Bill Wilson

    On January 20th, Representatives Jim Jordan (R-OH) and Scott Garrett (R-NJ) were joined by Senator Jim DeMint (R-SC) to introduce the “Spending Reduction Act,” legislation that promises to cut $2.5 trillion out of the budget over the next ten years. Call it a good start.

    “This bill represents the first step in the process, not the last,” said Rep. Garrett. That’s good, because, with an average savings of $250 billion every year, even if it were passed, the annual budget deficit would still amount to about $1 trillion. The bill would rein in the non-defense discretionary budget by $80 billion for the remainder of FY 2011, and then cut another $93 billion out of it for FY 2012, reducing it from $670 billion to $496.7 billion through 2021.

    Several programs would be eliminated, including the Corporation for Public Broadcasting ($445 million), the Legal Services Corporation ($420 million), the National Endowments for the Arts and Humanities ($335 million), and the Community Development Fund ($4.5 billion). Amtrak subsidies would end, saving $1.565 billion, and $150 million for the Washington Metropolitan Area Transit Authority would be cut. The $14 million USDA sugar program would be discontinued.

    Importantly, the administration of ObamaCare would be defunded, saving $900 million — and loosening the regulatory stranglehold the government takeover of health care will impose on the American economy.

    Automatic pay increases for civilian federal employees would stop for five years, and the total civilian workforce would be reduced by 15 percent as Baby Boomers retire. It would cut the remaining “stimulus” of $45 billion and end government control of mortgage giants Fannie Mae and Freddie Mac, saving another $30 billion. A previous increase of federal Medicaid spending would be rolled back for another $16.1 billion.

    Lawmakers looking for programs to cut should take a close look at this proposal — before it’s too late. Rep. Jordan, who chairs the House Republican Study Committee, noted that the out-of-control national debt has grown “from $8.6 trillion four years ago to more than $14 trillion today.”

    “This mountain of debt, nearly the size of our entire economy, threatens to create a whole new financial crisis,” Jordan warned. “Every day we refuse to change course and instill some fiscal responsibility, the problem grows even larger. Unless Washington acts soon to cut spending, massive tax hikes, economic stagnation, and national bankruptcy will rob our children of the opportunity to reach for the American Dream.”

    Senator DeMint agreed, saying, “Our nation stands on the edge of a fiscal cliff and we face a stark choice: go over the edge into bankruptcy and declining freedom or choose to make the hard decisions today to save our country for our children and grandchildren.”

    “Congress must take the steps now to balance the budget, pay off our debt, and preserve freedom for future generations,” DeMint added.

    That means now is the time to act. By far, the “Spending Reduction Act” is the most far-reaching proposal thus far to cut non-defense discretionary spending. If the House attached the bill to the must-pass FY 2011 continuing resolution that expires on March 4th, it would force the Senate and White House to accept the cuts, or to reject them, resulting in a government shutdown.

    Senate Republicans could do their part by refusing to invoke cloture on any continuing resolution that did not include the DeMint-Jordan-Garrett legislation. If Senate Minority Leader Mitch McConnell could keep 41 out of his 47 member conference together, he would help win this battle, the same way the $1 trillion omnibus bill was defeated in December.

    But it will only work if Republicans use these two leverage points: 1) attaching the spending cuts to the continuing resolution in the House and 2) refusing to invoke cloture on anything in the Senate but the House resolution.

    Harry Reid and Barack Obama would be forced to accept the terms of the American people, who in November overwhelmingly voted to cut spending. But, as Rep. Garrett noted, more must be done. Non-defense discretionary spending only accounts for 19 percent of the budget.

    Congress must also address the out-of-control growth of so-called “mandatory” spending in future efforts, which currently amounts to $2.18 trillion, or 62 percent of the $3.5 trillion budget. Americans for Limited Government has proposed about $460 billion in cuts to this area, which if combined with the DeMint-Jordan-Garrett proposal, would save about $710 billion every year.

    Overall, with a $1.3 trillion annual budget deficit, if Congress cannot find significant spending cuts to make, it will be impossible to restore order to the nation’s finances. Republican leadership should offer their support for the “Spending Reduction Act”, and then use their leverage to make sure it becomes law. They’ve got to start somewhere.

    Bill Wilson is the President of Americans for Limited Government.

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