Congressional Republicans Can’t Afford to Get Pushed Around on Budget Caps

Congress is coming back to town, and that means it’s time to hide our wallets. If the leadership of both parties are left to their own devices, by the end of September the government’s spending will have increased once again. This outcome is by no means inevitable; indeed, it shouldn’t even be possible after the Republicans took solid control of both the House and Senate. It will be up to those principled leaders who do care about the financial peril our nation faces to put the brakes on any effort to speed up the government’s spending.

President Obama and Senate Minority leader Harry Reid have made it clear for months that their priority has been to increase spending above the spending restraints they agreed to in 2011 when the president signed the Budget Control Act (BCA) into law. And in June, Senate Democrats straight-up threatened to shut the government down if they didn’t get the increases in spending that they desired.

To be fair, Republicans have also been trying to sneak large increases in defense spending through the BCA caps as well – tucking $30 billion for ordinary Pentagon funding into a fund that was supposed to be restricted to operational war spending.

A few reminders for both parties about our fiscal situation, even without busting through the BCA caps[^1]:

  • Even with the budget caps in place, discretionary spending is higher now than it was in 2008, and will continue increasing annually.
  • The U.S. annual deficit is projected to start increasing again starting next year, from $414 billion next year to over a trillion dollars per year starting in 2025.
  • Our nation’s total debt ($18.37 trillion) is larger than our entire economic output ($17.9 trillion).
  • By 2022 Medicare and Social Security are each expected to reach a cost of $1 trillion per year.
  • By 2025, just our interest payments on the national debt ($755 billion) are expected to exceed our defense spending for that year ($730 billion) – and if the Fed’s interest rates go up at all, our debt service payments go up with them.

The silver lining to this dark, gloomy cloud is that the BCA caps have actually done some real good. As the Cato Institute’s Dan Mitchell has been pointing out, the caps have slowed the growth of spending just enough that economic growth has been able to catch up with the expansion of government. In the end restructuring the big entitlement programs and reducing our debt are the real answer to rescuing our nation from insolvency, but the spending caps have at least bought us some breathing room.

Which is why it is so dismaying that Republican leadership seems determined to lose the fight to defend the caps before it has formally begun. Senator McConnell has repeatedly emphasized that he will under no circumstances tolerate a government shutdown, and the House leadership has said much the same. There is absolutely no reason for the president and Senate Democrats not to ask for anything they want, if they know that the mere threat of shutting down (a small portion of) the government will cause Congressional Republicans to quake in fear.

It is likely too much to hope that Congress will be able to pass any new major restraints on government with a inflexible lame-duck President Obama in the White House. But they can – and must – hold to the BCA spending caps – the one actual, useful achievement they have made.

[^1]: All numbers from the Congressional Budget Office and the White House Office of Management and Budget