Having shoveled out trillions of dollars in new spending and debt, House Democratic leaders now admit they cannot budget for all of it – and won’t even try. For the first time, the House will fail even to propose a budget. Instead the Democratic Majority will resort to an ad hoc, spend-as-you-go process that abandons any pretense of governing. Here are some key points about this budget collapse:
FAILURE TO BUDGET, FAILURE TO GOVERN
- Threatens Job Creation. The Democrats’ budget failure further erodes confidence in Washington’s intent to get Federal spending and debt under control – and creates even greater concern about impending tax hikes that will further hinder the private-sector job creation Americans desperately need. Washington’s failure to control spending undermines sustainable economic growth and job creation.
- Explodes Spending and Deficits. With no budget, no priorities, and no restraints, the Democratic Majority will push spending to a record $3.8 trillion in fiscal year 2011, and widen the deficit to a record $1.5 trillion this year. Since the President took office, spending has exploded by $1.8 trillion, including the failed “stimulus” bill, appropriations increases far above inflation, and the government takeover of health care, among others.
- Exacerbates Debt Crisis. By failing to address our Nation’s greatest fiscal challenge, unsustainable entitlement spending, the President’s budget – now the de-facto Federal budget – doubles debt held by the public in 5 years and triples it in 10 years – to an alarming 90 percent of gross domestic product.
While Democrats refuse to budget, Republicans have proposed several bills that could begin saving taxpayers’ funds right now. Along with previous calls for specific cuts from Republican Leader John Boehner and Republican Whip Eric Cantor, these proposals – offered as real legislation – would cut spending now to spur job creation and help get our fiscal house in order. Much more needs to be done to rein in runaway spending, but the following proposals are a start towards reassuring the public, and the financial markets, that Congress is serious about getting spending, deficits, and debt under control.
- Cancel Unused TARP Funds. Prohibit the Treasury Secretary from entering into new commitments under the Troubled Asset Relief Program [TARP]. Ending TARP would prevent up to $396 billion in additional disbursements; CBO estimates savings of $16 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
- Cancel Unspent ‘Stimulus’ Funds. Rescind all unobligated budget authority authorized under the “stimulus” bill and dedicate to deficit reduction. Saves up to $266 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
- Cut and Cap Discretionary Spending. Return non-defense discretionary spending to pre-Obama (fiscal year 2008) baseline levels. Saves up to $925 billion. Legislation introduced by Reps. Ryan and Hensarling (H.R. 3964) and Rep. Jim Jordan of Ohio (H.R 3298) include caps on discretionary spending.
- Reduce Government Employment. Hire one person for every two who leaves civilian government service until the workforce is reduced to pre-Obama levels (exempting the Departments of Defense, Homeland Security, and Veterans Affairs). Saves an estimated $35 billion. H.R. 5348 introduced by Rep. Cynthia Lummis of Wyoming.
- Freeze Government Pay. Freeze Federal civilian pay for 1 year. Saves an estimated $30 billion. H.R. 5382 introduced by Rep. Michele Bachmann of Minnesota.
- Adopt the Legislative Line-Item Veto. Enact a constitutional line-item veto law. The President’s FY 2011 budget included terminations, reductions, and savings that would achieve $23 billion in one year. While Congress may not accept all these savings, the Line Item Veto can help reduce spending. H.R. 1294 introduced by Rep. Paul Ryan of Wisconsin.
- Reform and Bring Transparency to Fannie Mae and Freddie Mac. Reform these companies by ending conservatorship, shrinking their portfolios, establishing minimum capital standards, reducing conforming loan limits, and bringing transparency to taxpayer exposure. According to CBO, the cost to taxpayers of putting government in control of Fannie and Freddie is $373 billion through 2020. Saves an estimated $30 billion. H.R. 4889 introduced by Rep. Jeb Hensarling of Texas. H.R. 4653 introduced by Rep. Scott Garrett of New Jersey.
- Create a Sunset Commission. Establish a commission to conduct systematic reviews of Federal programs and agencies, and make recommendations for those that should be terminated; and provide for automatic sunset of programs unless expressly reauthorized by the Congress. H.R. 393 introduced by Rep. Kevin Brady of Texas.
Table 1: Estimated Savings From Republican Spending Reduction Proposals
(in billions of dollars)
Cancel Unused TARP Funds 16
Cancel Unspent ‘Stimulus’ Funds 266
Cut and Cap Discretionary Spending 925a
Reduce Government Employment 35
Freeze Government Pay 30
Reform Fannie Mae and Freddie Mac 30