The federal government is approaching its legal borrowing limit, and fiscal conservatives in Congress are wondering what spending reforms they can extract in return for supporting a debt-limit increase. Various sorts of balanced budget amendments and debt limits relative to GDP are being kicked around. I support those ideas, but I fear that they may be too complicated to gain traction right now.
I testified this week to a a subcommittee of the House Oversight and Government Reform Committee looking at the effects of the 2009 stimulus bill (the “American Recovery and Reinvestment Act”).
A lot has happened since President Obama introduced his last budget in February 2010. His party took an historic “shellacking” at the polls for its big government policies, his Fiscal Commission recommended serious spending cuts, and European governments have illustrated the severe problems of deficit spending.
Despite the record $1.6 trillion deficit this year, and the consensus that exploding spending and debt is pushing the nation toward catastrophe, the Obama administration has completely chickened out on spending reforms in its new budget.
House Republicans proposed some (tiny) spending cuts this week and the Obama administration will likely propose some (tiny) cuts next week in the federal budget.
The Washington Post reports: “Obama has decided not to endorse his deficit commission’s recommendation to raise the retirement age, and otherwise reduce Social Security benefits, in Tuesday’s State of the Union address.”
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.
A top agenda item for the incoming House Republicans is to immediately start cutting spending. The GOP promised to reduce “nondefense” (or alternatively “nonsecurity”) spending for 2011 to the 2008 level, representing a $100 billion cut. GOP leaders are now being accused of backsliding on that promise, so let’s take a look at the numbers.