Hard caps on nondefense domestic discretionary spending will not significantly reduce long-term deficits. That’s because the biggest factors contributing to long-term deficits are primarily the 2001 and 2003 Bush tax cuts and the costs associated with the wars in Iraq and Afghanistan – not domestic discretionary programs. According to the Center on Budget and Policy Priorities:
Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including associated debt-service costs.
Domestic discretionary spending is the portion of federal spending included in annual appropriations bills to fund a broad range of national priorities, including education, environmental protection, law enforcement assistance, food safety, nutrition, medical research through the National Institutes of Health and more. Nondefense domestic discretionary spending makes up about 18 percent of all federal spending.
Earlier this year, Senators Jeff Sessions and Claire McCaskill introduced an amendment to the Federal Aviation Administration bill that would have imposed hard caps on all nondefense domestic discretionary appropriations bills for the next three years. According to the Center on Budget and Policy Priorities, the Sessions-McCaskill amendment would have required cuts totaling nearly $30 billion in fiscal year 2011 or five percent below the President’s budget request. In fiscal year 2012, the Sessions-McCaskill amendment could have required cuts totaling almost $100 billion; a 15 percent cut below the President’s budget request.
In addition to these spending cuts, the Sessions-McCaskill amendment also required a two-thirds supermajority vote in the Senate to change the hard caps on discretionary spending, with no exceptions for any changes in the national economy or other factors that could make reconsideration of the caps necessary. If the Sessions-McCaskill amendment were adopted, a minority of only 34 out of 100 senators could prevent Congress from raising the spending caps to meet a future economic challenge or emergency.
Placing hard caps on domestic discretionary spending would also impede efforts to raise revenues to reduce long-term federal deficits. That’s because in past deficit reduction agreements, multi-year discretionary spending caps were linked to revenue and entitlement savings. The Session-McCaskill amendment would result in deep cuts to domestic discretionary spending without securing any savings from other parts of the budget, including revenue increases. Simply imposing new caps on discretionary spending places all of the burden for reducing the deficit on one part of the budget and ignores how much tax cuts have contributed to deficits. The Center on Budget and Policy Priorities notes that the Bush-era tax cuts from 2001 and 2003 account for $1.7 trillion more in deficits from 2001 to 2008, and $3.4 trillion more over the 2009-2019 period.
Fortunately, the Sessions-McCaskill amendment was not adopted. However, it is likely that there will be continuing attempts throughout the remainder of this year to attach this amendment to individual appropriations bills or to a continuing appropriations bill later this year. A balanced approach to deficit reduction is needed — one that looks at both fair and appropriate spending cuts as well as the elimination of selective tax cuts that are contributing to long-term deficits.
-Steve Francisco
