September 10, 2013

As we head into fall and the end of the fiscal year, the conversation in Washington will once again center around one topic: spending. Americans are expecting to witness the same dramatic showdowns and heated rhetoric to which we’ve become accustomed as Congress debates both how to fund the government with the next continuing resolution and how to handle the debt ceiling as we once again exhaust our borrowing authority. The one thing Americans aren’t expecting to hear – and what we urgently need – is for our leaders to ask the question, “What’s the responsible way to resolve our fiscal crisis?”



Washington should be able to set priorities on spending cuts and focus on cutting waste and excess before gutting essential programs. Our leaders should make the tough decisions that they were elected to make – and do it on time.

Lawmakers Have The Opportunity To Make Smart, Targeted Spending Cuts For FY2014. “… barring action by lawmakers, the cap on total defense and domestic ‘discretionary’ spending is set $19 billion lower for fiscal 2014, which begins Oct. 1. In other words, the magnitude of the 2013 cuts will be preserved and $19 billion more will need to be cut from the discretionary budget, which funds a vast number of government programs and agencies from national parks to the FBI. The only difference between this year and next, however, is that lawmakers and agencies will have more flexibility in how spending is cut. This year sequestration mostly required agencies to make cuts across the board. Next year, lawmakers are simply obligated to keep discretionary spending below the statutory cap.” (Jeanne Sahadi, “Spending Cuts Likely Deeper In 2014,” CNNMoney, 6/10/13)

  • If Lawmakers Shirk The Responsibility To Prioritize Spending, They Will Trigger A Second Round Of Across-The-Board, Automatic Budget Cuts. “Therefore, it’s expected that lawmakers will pass yet another stopgap measure known as a continuing resolution to fund the government for a few weeks or a few months. … And if the resolution calls for discretionary funding at a higher level than the cap set in law, a second round of automatic budget cuts will be imposed on defense and domestic programs later in fiscal 2014.” (Jeanne Sahadi, “Spending Cuts Likely Deeper In 2014,” CNNMoney, 6/10/13)

The Washington Post: “After Six Budget Showdowns, Big Government Is Mostly Unchanged.” (David Fahrenthold, “After Six Budget Showdowns, Big Government Is Mostly Unchanged,” The Washington Post, 8/23/13)

  • Congress Often Passed Up ‘Smart Cuts’ In Favor Of Dumb Ones — Taking Broad Hacks At The Budget, Instead Of Pruning Away What Was Unnecessary.” (David Fahrenthold, “After Six Budget Showdowns, Big Government Is Mostly Unchanged,” The Washington Post, 8/23/13)
  • “The Government Still Spends A Vast Amount Of Money.” “This year, the government’s spending is projected to be down by about 5 percent from 2010, accounting for inflation. But even now, the government still spends a vast amount of money. This year’s projected spending will be more than in any year of the George W. Bush administration. And more than 30 percent higher (accounting for inflation) than the last year of President Clinton’s term.” (David Fahrenthold, “After Six Budget Showdowns, Big Government Is Mostly Unchanged,” The Washington Post, 8/23/13)

The Use Of Continuing Resolutions Has Become All Too Common, With 21 Passed Just Between FY2008 And FY2012. (Jessica Tollestrup, “Continuing Resolutions: Overview Of Components And Recent Practices,” CRS, 8/6/12)



Current law encourages agencies to adopt a “spend it or lose it” mentality as they rush to spend their remaining funds at the end of each fiscal year. We need to change the culture of incentivizing and rewarding wasteful spending and instead promote the responsible stewardship of taxpayer dollars.

The Wall Street Journal: “Under Current Law, Agencies Are Typically Forced To Return Any Unspent Part Of Their Budgets, Giving Them An Incentive To Use Every Last Dollar Even If The Money Isn’t Needed.” (Laura Meckler, “Giving Government Incentives To Save,” The Wall Street Journal, 6/7/10)

  • Agencies Feel Pressured To Spend In Order To Attain A Larger Budget For The Next Fiscal Year. “The threat that funding will be taken away or that future budgets can be reduced unless funds are obligated on schedule is a strong and perverse motivator. We risk creating incentives to enter into quick but poor business deals or to expend funds primarily to avoid reductions in future budget years. … For the past several years, Congress has used unobligated balances as a means to reduce our budgets.” (Robert F. Hale And Frank Kendall, “Department Of Defense Management Of Unobligated Funds; Obligation Rate Tenets,” Department Of Defense, 9/10/12)

Empirical Analysis Shows A Spike In Federal Spending During The Last Month And Week Of Each Fiscal Year. “Figure 1 shows contract spending by week, pooling data from 2004 through 2009. There is a clear spike in spending at the end of the year with 16.5 percent of all spending occurring in the last month of the year and 8.7 percent occurring in the last week.” (Jeffrey B. Liebman And Neale Mahoney, “Do Expiring Budgets Lead To Wasteful Year-End Spending? Evidence From Federal Procurement,” Harvard Kennedy School Of Government And Stanford Department Of Economics, 11/19/10)

  • The Flurry Of Year-End Spending Is Associated With A Drop-Off In The Quality Of Investment. “We then analyze the impact of the end-of-year spending surge on spending quality using a newly available dataset on the status of the federal government’s 686 major information technology projects—a total of $130 billion in spending. … In tandem with the spending increase, there is a sharp drop-off in investment quality.” (Jeffrey B. Liebman And Neale Mahoney, “Do Expiring Budgets Lead To Wasteful Year-End Spending? Evidence From Federal Procurement,” Harvard Kennedy School Of Government And Stanford Department Of Economics, 11/19/10)



Any increase in the debt ceiling should be matched by responsible, commonsense spending cuts. We need to make the tough decisions today to rein in our spiraling debt and ensure our long-term prosperity.

Under Current Law, The Debt As A Percent Of GDP Will Start To Rise Again By The End Of The Decade “And Continue To Be On An Upward Path.” “Under current law, the debt is projected to decline from about 76 percent of GDP in 2014 to slightly below 71 percent in 2018 but then to start rising again; by 2023, if current laws remain in place, debt will equal 74 percent of GDP and continue to be on an upward path.” (“Updated Budget Projections: Fiscal Years 2013 To 2023,” CBO, 5/14/13)

  • CBO: “Such High And Rising Debt Later In The Coming Decade Would Have Serious Negative Consequences.” “Such high and rising debt later in the coming decade would have serious negative consequences: When interest rates return to higher (more typical) levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving, over time the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they would have if debt levels were lower to use tax and spending policy to respond to unexpected challenges. Finally, a large debt increases the risk of a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.” (“Updated Budget Projections: Fiscal Years 2013 To 2023,” CBO, 5/14/13) 

Nearly Six In 10 Americans Say That For Every Dollar In New Borrowing There Should Be A Dollar In Cuts (34%) Or More (24%). (Public Notice, 9/4/13)

Tags:, , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *