Discretionary Spending Caps, A Good First Step

Stephen Keen / January 20, 2010

After quietly increasing the federal debt limit from $12.1 trillion to $12.4 on Christmas Eve, the US Senate is beginning debate today on yet another increase. Hoping to avoid making the skyrocketing debt levels an election issue; this time around they want to pass an increase large enough to feed their appetite through 2010. While the ever increasing mountain of debt is not welcome news to many, there is a glimmer of hope that the nation will someday return to a fiscally sustainable track.

Senator Jeff Sessions (R-AL) and Senator Claire McCaskill (D-MO) are expected to introduce an amendment to the debt limit bill that would: 1) Cap discretionary spending growth at approximately two percent per year, 2) Specify spending levels for defense and non-defense programs, and 3) Require a two-thirds vote to waive the annual caps.

While this alone would hardly solve the nation’s fiscal problems it would represent an encouraging start. Unfortunately, the remaining two-thirds of the budget labeled mandatory spending on the entitlements Social Security, Medicare, and Medicaid is ignored even though it will swamp the entire federal budget by 2052.

Over the past three years Congress increased regular discretionary spending by 25 percent, from $873 billion to $1,090 billion, not including the $311 billion in “emergency” discretionary spending provided by the “stimulus” bill for FY10 or any spending related to the Global War on Terrorism. In short, essential programs are hardly starving for funding. (more…)