Federal Spending Caps Could Save $300 Billion over 10 Years
Will Rogers, known worldwide for his cowboy brand of wisdom, once offered this sensible advice: “If you find yourself in a hole, stop digging.”
Today, America is in a historically deep hole of debt, and though common sense would dictate a cut in spending, the Obama administration and Democratic leaders in Congress continue to drive our deficits up and our nation further into the red.
Over the last two years, discretionary spending - that is, funding that Congress can direct to non-mandatory programs - has risen by 17 percent. When you factor in the $800 billion “stimulus” bill, the increase in discretionary spending is actually 84 percent. The national public debt hit an historical $13 trillion dollars in May. If the spending continues at its present rate, at the end of Obama’s first term, he will have added an additional $6 trillion to the public debt.
A bipartisan group of Senators are calling on leaders in Congress to stop digging - or in this case, spending. A proposal offered by Republican Senator Jeff Sessions and Democratic Senator Claire McCaskill would impose badly needed budget discipline by setting caps now for discretionary spending through 2014, except for defense spending. At this time of war, we need flexibility to fund our efforts in Afghanistan and Iraq, ensuring total support for our armed forces.
Discretionary appropriations represent 43 percent of the federal budget, so if we set caps now, it would substantially rein in federal spending over the next few years. The proposal has come before the Senate several times over the past year, and a majority of Senators have voted to impose the spending caps. Every Republican and 17 Democrats have voted for the Sessions-McCaskill proposal. This is a clear indication of the broad concern over federal spending levels. Unfortunately, we have not been able to meet the threefifths majority (60 votes) necessary to move this important legislation forward.
As a member of the Senate Appropriations Committee, which sets funding levels for the federal government, my committee colleagues and I are well-positioned to lead efforts to reduce overall spending. In July, all of the Republican members of the committee sent a letter to the Chairman, Senator Daniel Inouye, asking that we work together to produce appropriations bills that reasonably address fundamental government needs in a fiscally responsible manner. The Republican committee members also pledged that we would not support any of the committee’s spending bills that exceed the levels proposed in the Sessions-McCaskill spending freeze. True to our word, we have voted against every appropriations bill that would raise discretionary spending.
Our earnest commitment to fiscal discipline is important for several reasons. First, the enormity of the federal debt poses a direct threat to our national security. Foreign entities own over half of our nation’s privately-held debt. Owning $843.7 billion in U.S. Treasury securities, China is the greatest foreign shareholder. This makes our nation beholden to foreign interests, and gives them powerful economic leverage over the United States. We need only to look across the Atlantic to see what happens when a government can’t keep up with its debts. European countries like Greece, Spain, Ireland, and Portugal, which have long lived beyond their means, are in such states of debt that the value of the euro is plunging and compromising the stability of global markets.
Second, this culture of unrestrained spending is breeding uncertainty here at home, specifically among American families and small businesses. This hinders our broader economic recovery. To pay for the federal spending spree, the administration and some in Congress propose allowing the Bush tax cuts to expire at the end of this year. This would amount to the largest tax hike in our nation’s history. Faced with the prospect of a heavier tax burden, many commercial operations are hesitant to plan or invest and consumer spending may slow. Business owners large and small have told me they are postponing hiring decisions until they have greater confidence in the strength of the economy.
The time has come for Congress to stop digging America deeper into debt. An immediate step we can take is to cap discretionary spending. The modest proposal we have offered would reduce deficits by $300 billion over 10 years and begin to put our financial house in order. We must also make sure that the tax burden of American families and businesses is kept low so they can facilitate economic recovery through investment, job creation, and careful spending of their own money.
Kay Bailey Hutchison is the senior U.S. Senator from Texas and is the Ranking Member of the Senate Committee on Commerce, Science, and Transportation.