Outgoing Florida Republican Sen. George LeMieux plans to make his Senate colleagues put their money where their mouth is on deficit and debt reduction by forcing them to vote on it before the end of the year.
LeMieux’s plan would restore and cap federal spending at 2007 pre-stimulus levels, which goes further than a similar proposal by Sen. John Thune, South Dakota Republican that would reduce non-defense discretionary spending to 2008 levels. His proposal has been co-sponsored by Sens. Jim DeMint, South Carolina Republican; Roger Wicker, Mississippi Republican, and James Risch, Idaho Republican.
“We need to roll back to a pre-stimulus level and cap spending at that level,” LeMieux said. “If we can do that it will do a couple of things. One, it will cause us to have to use discipline as a country, and Congress will have to go back and make sure the money that is being spent at these agencies is efficient and effective because we’ll be cutting it.
“And two, we will be putting the country on a path that is sustainable where we won’t be having debt racking up more and more and more — getting to $26 trillion by the end of this decade, which is where we currently are headed.”
The federal government spent $2.7 trillion in the 2007 fiscal year, compared with $3.5 trillion for the past fiscal year that ended on Oct. 1. LeMieux projects the federal budget would be balanced by 2013 were Congress to pass his austerity measure, which contrasts with the Obama administration’s projection of an $800 billion deficit for that year using current spending levels.
LeMieux chose 2007 as his baseline year because it was the last year of economic growth before the start of the recession. It would take 60 votes in the Senate and 261 votes in the House to spend beyond 2007 levels and each house of Congress would have to find a way to reallocate resources to keep them under the cap.
The senator plans to tack his proposal on to any continuing resolution aimed at funding federal agencies or omnibus spending bill that comes to the Senate floor as an amendment or point of order, which would force his colleagues to let the American people know where they stand on deficit and debt reduction.
“We need to have a discussion on this,” LeMieux said. “I think most of my colleagues are whistling through the graveyard, Democrats and Republicans alike don’t understand this is a catastrophe waiting to happen, and something has to be done in the next couple of years or that catastrophe will be unavoidable.”
The deficit reduction commission’s proposal does not go far enough because it only would cut $4 trillion out of the next $12 trillion in debt, expected in the next decade, and does nothing to reduce existing debt.
“So instead of being at $26 trillion in 2020, we would be at $22 [trillion],” LeMieux said. “That’s not going to work, that’s not sustainable also.
“We need to not only stop the accumulation of new debt; we’ve got to cut the debt we have.”
A June 2010 Congressional Budget Office (CBO) report predicts the costs of staying on the current course would be catastrophic. The report found maintaining large budget deficits would increase borrowing from abroad and reduce national saving, which would trigger higher interest rates, and lower domestic investment and income growth nationwide.
“Keeping deficits and debt from growing to unsustainable levels would require raising revenue as a percentage of GDP significantly above past levels, reducing outlays sharply relative to CBO’s projections, or some combination of those approaches,” the CBO report said.
China’s leading bond rating agency has already taken steps to downgrade its rating of the national debt, which lines up with the CBO report’s warning that investors would lose confidence in the federal government’s ability to manage its fiscal affairs.
CBO projects this scenario could lead to higher interest on the national debt, which would make an already bad situation even worse.
“The truth of this is that it is cascading out of control, while most people in Washington are walking around like everything’s fine,” LeMieux said. “If we don’t do something in the next couple of years in order to address this, it’s going to be very hard to ever address it.
“We’ve got to do something tomorrow, literally tomorrow, to get this country back on the right track.”
The ballooning national debt also poses a significant threat to national defense, and Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, has said it is a bigger threat to national security than al-Qaida.
“The future of this country as the lamp of freedom around the world is threatened if we don’t address this debt problem,” the senator said. “If we don’t do something that lamp will not burn as brightly, and it will have an impact not just for our kids and whether they are going to achieve their hopes and their dreams, but it’s going to affect foreign policy. It’s going to affect national security.”
Adopting his plan would have the opposite effect by encouraging economic growth and foreign investment, LeMieux said.
“By the end of the decade we would cut the current national debt in half from $13 trillion to just more than $6 [trillion],” LeMieux said. “You may even get a better results because if we get our fiscal house in order, you will create more economic growth, which would bring in more tax dollars.”
LeMieux’s numbers square with reality, according to Ryan Ellis, tax policy director with Americans for Tax Reform.
“It’s practical in 2010, 2011,” Ellis said. “Had he come out with his plan in 2007 or 2008, or 2006, it would have been very impractical, but the political dynamics have completely changed.
“We have never had this kind of consensus for spending restraint and even massive spending cuts; I think there is really a mandate there. People really want to see spending seriously cut and rolled back in a way they haven’t wanted to see before.”
Heritage Foundation budget expert Brian Reidl said balancing the budget and reducing spending requires a bold move such as LeMieux’s.