Cut, Cap, and Balance, Explained

Budget proposals are coming fast and furious in Washington these days.  Most of it is political chatter, but there HAVE been a number of proposals that aspire to responsible government for the long term.  Today’s top story in that regard is “Cut, Cap, and Balance” which would smooth over some near-term political problems while establishing a framework that would help us deal with the huge pressures that will come to bear when the Baby Boomers retire.   An article in the National Review explains:

Under the “Cut, Cap, and Balance” legislation, Congress would raise the debt ceiling by $2.5 trillion (the amount requested by President Obama to get him through the 2012 election). However, that increase would go into effect only if both houses of Congress pass — with two-thirds majorities — a balanced-budget amendment (BBA) to the Constitution and send it to the states for ratification. In addition, the plan calls for significant spending cuts to next year’s budget — about $111 billion — and firm caps on federal spending at 18.5 percent of GDP by the end of the decade.

The truth is that $111 billion in cuts can be accomplished largely by eliminating the most porky and ridiculous earmarks.  This year’s budget, after all, proposes that we take in tax revenue of $2.6 trillion and spend $3.8 trillion.  The real heavy lifting would start several years after the balanced-budget amendment is ratified by the states. 

We continue to see misinformed howls of protest that a balanced budget amendment would prevent Congress from spending in emergencies.  In our last post we explained how the supermajority provision in the amendment would allow that spending, and you can see the actual language describing that mechanism in Senate Joint Resolution 23.  S.J. Res. 23 is the successor to the four balanced-budget amendment bills that were in the Senate earlier this year. 

Democrats will surely insist on a more-generous spending cap than 18% of GDP (which happens to be the rough average of our tax collections of the last 50 years;  years that included a 70% top tax bracket and even a 91% top tax bracket).  Senator Mark Udall (D. Colorado) co-sponsored a similar bill with a 20% cap, and we would hope that the President and the rest of the Congress would get into the game by offering their own cap proposals.  Call your representatives, and tell them that it’s time they joined the debate.

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