A number of the House GOP’s leading conservative members on Thursday will announce legislation that would cut $2.5 trillion over 10 years, which will be by far the most ambitious and far-reaching proposal by the new majority to cut federal government spending.
Rep. Jim Jordan of Ohio, the chairman of the Republican Study Committee, will unveil the bill in a speech at the Heritage Foundation on Thursday morning.
Jordan’s bill, which will have a companion bill introduced in the Senate by Sen. Jim DeMint, South Carolina Republican, would impose deep and broad cuts across the federal government. It includes both budget-wide cuts on non-defense discretionary spending back to 2006 levels and proposes the elimination or drastic reduction of more than 50 government programs.
Jordan’s “Spending Reduction Act” would eliminate such things as the U.S. Agency for International Development and its $1.39 billion annual budget, the $445 million annual subsidy for the Corporation for Public Broadcasting, the $1.5 billion annual subsidy for Amtrak, $2.5 billion in high speed rail grants, the $150 million subsidy for the Washington Metropolitan Area Transit Authority, and it would cut in half to $7.5 billion the federal travel budget.
But the program eliminations and reductions would account for only $330 billion of the $2.5 trillion in cuts. The bulk of the cuts would come from returning non-defense discretionary spending – which is currently $670 billion out of a $3.8 trillion budget for the 2011 fiscal year – to the 2006 level of $496.7 billion, through 2021.
Going back to 2006 levels would reduce spending by $2.3 trillion over ten years. It is a significantly more drastic cut than the one proposed by House Republican leadership in the Pledge to America last fall, which proposed moving non-defense, non-mandatory spending for the current fiscal year back to 2008 levels, which was $522.3 billion. Jordan’s proposal includes the recommendation from the Pledge for the current fiscal year, which ends in September.
The proposal would cut the federal work force by 15 percent and freeze automatic pay raises for government employees for five years.
The RSC boasts a membership of 165 members out of 242 total House Republicans. Majority Leader Eric Cantor, Virginia Republican, is a member, as is House GOP Conference Chairman Jeb Hensarling, Texas Republican, and Chief Deputy Whip Peter Roskam, Illinois Republican.
None of the three chose to comment on the proposal when asked about it through spokesmen on Wednesday.
It was not clear Wednesday whether the bill would be pushed hard by leadership, though the prospect seemed unlikely, at least for the moment. Cuts of such magnitude will undoubtedly come under heavy fire from Democrats and liberal interest groups, and Speaker John Boehner has for the most part avoided specific stands on spending cuts, seeking to minimize exposure to attacks from the opposition.
President Obama, in addition, will have the chance in next week’s State of the Union address to speak to a national audience about the country’s fiscal situation, and could point to such cuts as too costly to services for many Americans.
Even if Boehner, Ohio Republican, got behind the cuts and the House passed such legislation, it would face a steep challenge to passage in the Senate, which is still controlled by Democrats. And Obama – who has said he believes that cuts could hinder economic recovery if they are too draconian in the short term – is unlikely to support such a dramatic move to pull back on spending.
Nonetheless, the bill serves as a stake in the ground for conservatives and fiscal hawks as they prepare for a major showdown over raising the debt ceiling, which will take place at some point in the next few months. A proposal by Sen. Rand Paul, Kentucky Republican, to cut $500 billion in one year alone, is another.
All of these measures are the first chess moves in a year that will be dominated by attempts from both Obama and Republicans to make real progress on reducing the nation’s $14 trillion debt and the $1.3 trillion annual deficit, while also trying to avoid absorbing politically damaging attacks from the other side.
None of the players in Washington, of course, have yet to come anywhere close to touching the thing that will drive the nation off a fiscal cliff in the next decade or two if nothing is done: entitlement spending on Medicare, Medicaid and Social Security.
If year to year spending is not restrained and no plan to solve the problem with long term unfunded obligations is laid out and implemented, interest on the debt will begin to swallow up much of the annual federal budget. The nation’s ability to finance defense would be constrained to the point of rendering it a second tier world power, or worse, and domestic spending would be so squeezed that the negative consequences are hard to foresee.
The other significant risk is a debt crisis in the nearer term future if creditors lose faith in the country’s ability to pay back its bond obligations.
Other cuts in the Jordan proposal include putting the $45 billion remaining in the stimulus toward deficit reduction, eliminating federal control of mortgage giants Fannie Mae and Freddie Mac to the tune of $30 billion in savings, and clawing back $16 billion currently scheduled to go toward helping state governments pay for Medicaid recipients.
There are clear cut significant costs to such a proposal. Getting rid of the $6 billion or so in stimulus that is reserved for state governments in the upcoming fiscal year, along with the $16 billion in state Medicaid payments, would compound what is already set to be the worst year of fiscal problems yet in this economic downturn for state governments. They face their biggest deficits of the recession already because stimulus money has for the most part run out, and are in the process now of figuring out what services they will have to cut.
But Jordan said Wednesday that the nation must endure short term pain of its own choosing to avoid long term pain that it is far more serious and beyond its control.
“Unless we begin to cut spending immediately, massive tax hikes or national bankruptcy will rob people of the chance to reach for the American Dream,” he said.
Jordan’s co-sponsor on the bill is Rep. Scott Garrett of New Jersey, who chairs the RSC’s budget and spending task force. And Jordan will be joined at a Capitol Hill press conference by other RSC members: Rep. Jeff Flake of Arizona, Rep. John Campbell of California, Rep. Tom McClintock of California, among others.