Government Spending

Cut, Cap, Balance: How to Address the Debt Ceiling Issue


Colin Hanna, Chris Chocola, and Ken Blackwell, who head up various limited-government groups, say this about the debt limit in the Wall Street Journal:

First, we must demand that spending is cut. We should make discretionary and mandatory spending reductions that would cut the deficit in half next year. Last year's deficit was $1.6 trillion, the largest in history. We must cut our deficits now, not over 10 years.

Second, we must demand enforceable statutory caps to return federal spending to 18% of gross domestic product, where it has been for most of the past 60 years. Federal spending is now nearly 25% of GDP, which is unsustainable. If the spending cap is breached, it must trigger automatic spending reductions. Republicans in the Bush years and Democrats in the Obama years have proven that we cannot trust them when it comes to spending.

Third, we must insist on passage of a balanced budget amendment before that debt-limit vote occurs. The amendment drafted by Sen. Mike Lee (R., Utah) is a good example to follow. It requires a two-thirds vote in both houses of Congress to increase taxes and a three-fifths vote in both houses to raise the debt limit, and it requires the president to submit a balanced budget to Congress each fiscal year.

Whole thing here.

The thing about spending caps, of course, is that they are no substitute for the political will to enforce them (this is beyond any sort of legal or constitutional challenges or even political obstacles). If voters and their elected representatives don't believe in spending less, or balancing spending and revenue, they will always find ways around caps of any kind. Yet I think the sort of plan above helps focus attention and build the will needed to stay on the budgetary diet. And it's worth pointing out that Sen. Mike Lee's plan does allow the circumvention of spending caps under narrow circumstances (which of course brings us back to the start of this paragraph).

Another point worth noting—and it's one that Veronique de Rugy and I made in our story "The 19 Percent Solution: How to Balance the Budget Without Raising Taxes"—is that the level of total federal revenue is not like the volume knob on a stereo. It can't be turned up (or, alas, turned down) at will. It's remained stuck close to that 18 percent of GDP level for 60 years despite all manner of attempts to goose it up or bring it down. The best five-year stretch averaged 19.8 percent of GDP (fiscal years 1997-2001). Historical averages of revenue needs to be the starting point of all budget discussions, especially since it is possible to change spending levels (though certainly not easy). For those who worry that spending 18 percent of GDP is just too little to support core federal functions, recall that Bill Clinton spent 18.2 percent in his last year in office and over his last five years in office, federal outlays averaged 18.5 percent of GDP. Then came the deluge. interviewed Chris Chocola of the Club for Growth last September in the run-up to the midterm elections. Take a look: