Economy needs spending cuts, not spending caps
The debt ceiling negotiations came to close as lawmakers reached an 11th hour agreement to increase the limit and cut nearly $1 trillion in spending. (See our infographic series for more on the cuts.) The deal also included spending caps for discretionary outlays. At first glance, that seems reasonable: a limit on spending. But a closer look at the specifics reveals that it actually does little to address our serious spending problem.
Yesterday, an article in the New York Times indicated that lawmakers were taking a breather on budgeting, noting that the debt ceiling agreement provides some “stability” when it comes to federal spending.
The Times reports:
Eager to avoid another round of budget brinksmanship, Congressional leaders hope that a little-noted spending agreement tucked into the debt limit deal reached this month can head off any threat of a government shutdown as the federal fiscal year draws to a close in September.
While provisions to raise the debt limit and create a Congressional deficit reduction committee drew most of the attention in the legislation that allowed the government to narrowly avert a default, House and Senate leaders also used the measure to establish federal spending limits for the next two years.
Sounds good, right? However, reading on, the problem becomes clear.
The Times continues:
In the debt limit bill, Congress allotted $1.043 trillion for spending on federal agencies and national security in 2012, an amount that does not include money for so-called mandatory programs like Medicare.
That level is $7 billion less than current spending…. The ceiling rises to $1.047 trillion in the 2013 fiscal year, potentially saving Congress from another politically charged spending fight before the midterm elections in November 2011.
The issue is, of course, the spending caps go up over the years, doing little to chip away at our debt burden. Right now, the economy doesn’t need federal spending “stability.” For the recovery to take hold and for some semblance of economic certainty to return, Congress must institute spending cuts, not spending caps.