July 25, 2014

CONCORD COALITION URGES CONGRESS TO ENACT INFLATION-ADJUSTED SPENDING CAPS

WASHINGTON -- With Congress and the Administration scheduled to resume their year-end budget negotiations Tuesday, The Concord Coalition today released an issue brief entitled Discretionary Spending Caps: What's Next? (Requires Adobe Acrobat Reader)  Now available on-line, the document urges officials to enact a new budget cap based on the Congressional Budget Office's inflation-adjusted baseline of approximately $611 billion for fiscal year 2001.

 

The brief presents the history of spending caps; outlines several scenarios that might play out – major surgery (make the cuts); the Houdini maneuver (gimmicks); declare victory and get out; spend and cap; and cap and spend; and explains Concord's position that the spending caps should be retained but raised to reflect changed fiscal circumstances and political reality.

 

“It is apparent that the current spending caps are no longer viable.  Perhaps it would have been better if the 1997 caps had been followed, but they weren't.  That story is over.   The question now is what comes next?  Without credible caps on discretionary spending, what comes next is likely to be a messy, arbitrary, expansion of government spending based not on policy priorities but on interest group clout and the leverage of powerful legislators.  It is no secret in Washington that this is hunting season for lobbyists, and the pickings have rarely been so bountiful.  Standing in front of this oncoming train will not stop it.  A more effective means must be used to apply the brakes. The best answer is a new set of caps set at a more realistic level to reflect changed circumstances,” explained Robert Bixby, Concord's Executive Director.

 

“New caps will impose no more discipline than the current caps if they do not reflect the dramatically changed fiscal circumstances over the past three years. Recent experience has shown that when the government is running an overall surplus, Congress and the President are not prepared to freeze discretionary spending, let alone make sizeable cuts.

 

“…Negotiating a new comprehensive fiscal framework for an era of projected budget surpluses is a task that will have to be postponed until after the November election. There is no time for such negotiations before then, and in any event it would make little sense to enter into such a process now given that a new President and Congress will take office in January. However, the question of what to do with the caps this year cannot be postponed.

 

“Few on Capitol Hill are anxious to say so publicly, but it is widely believed that by the time this year's budget negotiations are over, discretionary budget authority for fiscal year 2001 will stand at $630 billion or higher.  This is well above the $611 billion that the Congressional Budget Office says would be needed to keep pace with inflation; well above the $600 billion limit of the Congressional Budget Resolution; and almost $100 billion over the statutory budget authority cap ($542 billion).

 

The Concord Coalition believes that a fiscally responsible and politically feasible compromise measure for fiscal years 2001 and 2002 would be to reset the caps to reflect CBO's inflation-adjusted baseline.

 

“…Adopting the inflation-adjusted baseline would provide enough budget authority to fund national priorities while imposing more fiscal discipline than allowing spending to free-float in an uncapped atmosphere.  Agreeing to spend roughly $611 billion in early September may well prevent a runaway omnibus spending bill in late October of as much as $630 billion. Moreover, the higher spending goes this year, the higher the baseline and the higher future spending is likely to be.

 

“…Whatever the end result of this year's budget process, the American people deserve an honest accounting of their tax dollars. The gimmicks must end.  With nearly $2 trillion in play, it is important to have a credible process for deciding how to prioritize federal resources.  Congress and the President should approach this task in a serious manner with respect for the public, the process and each other. Rules that are routinely violated are worse than no rules at all because they fail in their basic purpose to control spending and they breed contempt for the budget process by encouraging gamesmanship and chaos.  Unfortunately, that is where things now stand.  In this highly political year, the challenge for Congress and the President is to rise above politics and restore honesty and discipline to the budget process,” Bixby declared.

 

The Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal budgets and generationally responsible fiscal policy.  Former U.S. Senators Warren Rudman (R-N.H.) and Sam Nunn (D-Ga.) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.