Conservatives didn’t receive everything they wanted from the debt ceiling bill, but they did receive something very important: the first meaningful deficit reduction in return for raising the debt ceiling since 2011. But unless Congress follows up this first step, taxpayers could find they got less deficit reduction from the deal than they thought.
On paper, according to the nonpartisan Congressional Budget Office (CBO), the debt ceiling deal, the Fiscal Responsibility Act (FRA), reduces deficits by $2.1 trillion over the next decade. Even though that represents just a tenth of the projected deficit increase over that period, $2.1 trillion is nothing to scoff at, especially in the context of the nine deals to raise the debt ceiling since 2011. That list includes six deals with essentially no change to the deficit and three others that worsened deficits by a combined $532 billion.
Much of the savings under the FRA come from discretionary spending caps that restrict the growth of spending between fiscal years 2024 and 2029. That’s an important step towards fiscal responsibility, but only if Congress doesn’t set the caps aside as soon as they become inconvenient.
Unfortunately, that’s even easier to do under the FRA after 2025 than it is now. While the discretionary spending caps under the bill are enforceable via sequestration for FYs 2024 and 2025, the caps for FYs 2026 through 2029 are merely “advisory.” In other words, Congress is free to simply ignore them and spend as it pleases.
Should Congress fail to abide by these “advisory” spending caps, the $2.1 trillion in advertised deficit reduction would end up closer to $1.5 trillion in deficit reduction, saving taxpayers $553 billion less. Given that the FRA can be viewed only as a positive first step towards fiscal responsibility, it would be concerning if Congress were unable to adhere to this most modest of spending reductions.
Not all legislators are willing to simply trust future Congresses to remember their commitments to taxpayers, however. Representative Glenn Grothman’s (R-WI) Enforce the Caps Act would add teeth to these caps by making them mandatory rather than advisory.
Making this legislation particularly important is the fact that in the broader scheme of deficit reduction that will be necessary to bring the nation’s debt back down to manageable levels, far harder cuts than those targeting discretionary spending will be necessary. If Congress can’t hold itself to the relatively politically easy cuts, it’s a bad sign for legislators’ ability to put the state of the country’s finances before their immediate political goals.
The country’s accumulated debt is at concerning levels now, but over the next decades it is set to grow at a worrisome rate. That’s due mostly to demographic changes making Social Security and other entitlements (a budgetary term for mandatory social spending) insolvent. By 2033, the cost of these entitlements, including paying interest on the national debt, will exceed total tax revenue taken in.
Addressing those politically-untouchable programs will be far harder than cutting down discretionary spending, and far harder still than making cuts to discretionary spending that Congress has already informally committed to. Rep. Grothman’s legislation would help make sure Congress at least holds itself to the baby steps.
When it comes to our national debt, it’s not really a question of whether or not cuts need to be made, but rather whether Congress will make cuts by choice now or force future generations to do so down the line. Much work remains to be done to avert the latter.
Andrew Wilford is a senior policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax and fiscal policy research and education at all levels of government.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.
