How Would “Cut and Cap” Work for Debt Ceiling?

January 18th, 2011 at 11:47 pm | 6 Comments |

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Chris Edwards writes:

Gross federal debt just hit $14 trillion and will soon reach the legal limit of $14.3 trillion. House Republicans are wondering what spending reforms they can extract from the Democrats for their support of a debt-limit increase.

I propose a “Cut and Cap” strategy. The GOP should insist on the $100 billion in initial cuts they promised, and also demand passage of a legal cap on overall federal spending. A simple form of such a cap would specify that total federal outlays cannot rise more than inflation plus population growth each year. If it did, the law would require that the president sequester, or cut, spending across-the board to meet the limit.

The chart illustrates the power of such a cap. The top line shows total spending as projected under President Obama’s budget. The president has spending growing at an average annual rate of 5.6 percent between 2013 and 2020, which is absurdly high given that we are running trillion-dollar deficits. The bottom line shows spending capped at 3 percent annual growth, which is roughly the sum of expected population growth and inflation.

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6 Comments so far ↓

  • TJ Parker

    Wussies. Put politics aside, gentlemen and -women, and do your frakking jobs.

  • Houndentenor

    If Republicans are serious about reducing the debt and cutting spending, they will show up with list of what to cut, sit down and negotiate and then agree if the compromise list is passed with the debt ceiling increase they will vote for it.

    Instead what we’ll get is a lot of grandstanding and pandering to the base who somehow think that tiny cuts in social program and foreign aid can get us to a balanced budget.

  • Non-Contributor

    But why? Why do you want to reduce the debt, why, why, why, why.

    Fix unemployment.

  • dante

    I’ve got a better idea, how about you guys BALANCE THE F**KING BUDGET??!?

    Oh that’s right, because you just passed a $900b tax cut and spend bill, showing that it’s “business as usual”. The issue isn’t the spending alone. The issue is spending more than we take in. Of course, in today’s GOP nobody gives a flying f**k about the deficit, they only want to use it as an excuse to cut programs they didn’t like in the first place. By that measure, GWB’s tenure was a *smashing* success. Taxes were cut, spending soared, and now the GOP is trying to use the fact that there’s no more money in the budget to cut SS, Medicare, Medicaid, Welfare, gov’t jobs, etc. If you were so concerned with the deficit, why didn’t you allow the GWB tax cuts to expire??

    Ugh. Looks like I’m not coming back to the GOP fold anytime soon…….

  • valkayec

    “Cut and caps” makes a lovely sound bite. Who wouldn’t like to cap spending? Problem, of course, is reality keeps interfering…and so do natural disasters and all those other unplanned emergencies. I’m with the others who say the GOP should sit down and figure out how much is really needed to fund the government (what to keep & what to eliminate) then go about figuring out how to achieve that funding. I’m of course in the camp of eliminating most of the free market distortions caused by corporate and industry tax subsidies, credits, and tax expenditures. Those should be the tackled, but unfortunately are auto-piloted into the budget each year at a cost, I’ve read, of about $550 Billion each year.

    Frankly, I’m getting awfully tired of tricks and gimmicks, rather than serious thought and hard work. It’s no wonder the country is such a absurd mess.

  • valkayec

    Written by James Kwak, Baselinescenerio.com

    Deficit Hawkoprite, Eric Cantor
    http://baselinescenario.com/2011/01/19/deficit-hawkoprite-eric-cantor/

    June 7, 2010 at 9:11 am

    Eric Cantor, House Republican Majority Leader, said the Republicans will demand spending cuts (http://thecaucus.blogs.nytimes.com/2011/01/18/cantor-says-house-wont-raise-debt-limit-without-serious-cuts/) in exchange for the votes necessary to raise the debt ceiling.

    Eric Cantor, member of Congress, voted for:

    * The 2001 tax cut
    * The 2003 tax cut
    * The 2003 Medicare prescription drug benefit
    * The 2010 tax cut

    In other words, of the big five budget-busting measures of the past decade, the only one he didn’t vote for was the 2009 stimulus. In other words, he had the opportunity to vote for $3.1 trillion of the 2011 debt, and he voted for 75 percent, or $2.3 trillion — just like most Republicans who were in Congress for those five votes.

    For explanation and sources, see this post (http://thecaucus.blogs.nytimes.com/2011/01/18/cantor-says-house-wont-raise-debt-limit-without-serious-cuts/).