Incoming House Speaker John Boehner and his new tea-party fueled colleagues are laying the groundwork for what would be, in absolute terms, the largest reduction ever in federal discretionary spending.
During the recent midterm elections campaign, Republican leaders pledged to reduce non-entitlement spending by a whopping $100 billion.
Doing so would effectively roll back the federal government’s non-entitlement spending to 2008 levels, budget experts tell Newsmax.
“I’m here tonight to tell you that our new majority will be prepared to do things differently,” Boehner declared after the elections, “to take a new approach that hasn’t been tried before in Washington by either party. It starts with cutting spending instead of increasing it . . . Reducing the size of government instead of expanding it.”
Democratic leaders, keenly aware that budget cutting will draw bitter opposition from special-interest groups, seem almost amused by the “rollback to 2008” mantra that Boehner and the freshman GOP members of Congress have enthusiastically embraced. The newly re-elected leader of House Democrats, Nancy Pelosi, said Wednesday she welcomes Republican proposals.
But Pelosi’s openness figures to change once the 112th Congress gets down to business. Experts on the federal budgeting process tell Newsmax there is little doubt that Republicans will move quickly to trim federal spending.
“The Republican leadership has committed to this $100 billion cut,” says Brian Riedl, lead budget analyst for the Heritage Foundation. “I expect them to do everything in their power to enact it. They’re on the record, they ran on this, and if it’s brushed aside there would be harsh political consequences.”
In fact, some Republicans want much deeper cuts. Outgoing Florida Republican Sen. George LeMieux tells Newsmax that he will introduce legislation in the lame-duck session to roll back all federal spending, including entitlements, to 2007 levels.
Doing so, he says, would balance the budget by 2013.
“And it doesn’t seem like that should be that hard to do,” LeMieux tells Newsmax. “Were things really so bad with the way the government was providing services just three years ago? . . . let’s go back, let’s cap all spending. That will make Congress do its job.”
No one expects LeMieux’s initiative to be much more than symbolic. But the budget-cutting fervor is palpable in the soon-to-be GOP-controlled House.
Rep. Cliff Stearns, R-Fla., a leading contender to become the next chairman of the powerful House Energy and Commerce Committee, tells Newsmax that slashing federal spending is essential to reviving the economy.
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“I think if we saw some sacrifice by government, I think businesses would feel more comfortable, because they’ll say, ‘We’re taking the sacrifice, why isn’t government?’” Stearns says.
“So I think it would send a message to the economy that government is willing to, shall we say, reduce spending and try to limit regulations. And that would help stop the uncertainty in the economy, because there’s so much money ready to be invested. So I think that that’s a big step that Republicans have to do early.”
“Early” for this Congress appears to be the operative word.
One reason for the rush: The federal government is burning through money at such a rapid clip that it will be threatening to break through the $14.3 trillion debt-level ceiling by about April.
That means the tea-party-tinged House will have only a few months to demonstrate it is serious about cutting spending before members have to hold their noses and raise the debt ceiling.
Not doing so could effectively make the federal government shut down, and Republicans still break out in hives when they recall how a shutdown in 1995 altered the political balance in favor of President Bill Clinton.
With the clock ticking toward that April showdown, analysts say Republicans will have to seize the initiative right away.
“It actually gives Republicans an incentive to come fast out of the gate and propose some serious spending cuts,” says Cato economist Chris Edwards, the editor of DownsizingGovernment.org. “Because ultimately they are going to be forced to vote for that debt-limit increase. And if they have to take that vote before they propose any spending cuts, they’re going to look pretty hypocritical.”
Budget experts tell Newsmax a looming tug-of-war over federal spending appears inevitable:
- The continuing resolution, which allows spending to continue despite the fact that federal agencies do not have a 2011 budget (Uncle Sam’s 2011 fiscal year began on Oct. 1) will expire on Dec. 3. Look for another continuing resolution in the lame-duck Congress to kick the 2011 budget down the road for the 112th Congress to deal with.
- Jan. 1 — The Bush-era tax cuts will expire, unless the Democratic-controlled lame duck Congress acts.
- Jan. 3 — The 112th Congress. The actual swearing-in date will be a day or two later.
- Sources expect House Republicans to move quickly to pass a budget resolution establishing a target for 2012 discretionary spending at $100 billion less than current levels.
- By January, it will be too late to establish a 2011 budget. Just drafting the new budget would take until March, and the fiscal year would be half over by then. So instead, the 112th Congress will pass a continuing resolution for the remainder of the year that freezes spending at the 2010 budget levels. This could frustrate tea party conservatives, who would like to see spending cuts begin right away. There has been discussion of passing a resolution at reduced spending levels, but that would be difficult to achieve.
- Once the discretionary spending target has been set in the House, the House Appropriations Committee and the Republican leadership will draft a new, trimmer budget for 2012.
- Republicans have more than enough votes to move the new budget through the House. Democrats are expected to stonewall it in the upper chamber they will still control. But with 23 Democratic senators up for re-election in 2012, they may be more willing to negotiate than many pundits predict. “There may be more of an appetite to cut spending than usual,” Riedl says, “given the election we just had.”
- Once the Senate passes a budget, the House and Senate will meet in a conference to negotiate their differences.
- In April, the debt-ceiling limit will have to be raised. Republicans say they will ask for corresponding cuts to offset the rise in the debt ceiling, but with the clock ticking down, that may be a bridge too far.
Experts say there’s a good chance that, at a minimum, a freeze on federal discretionary spending for a two- or three-year period will result. The various deficit commissions examining the deficit problem support that. But is just holding spending steady at record levels enough to put the economy on the road to recovery?
Whether deeper cuts happen next year depends on whether Democrats and the president are willing to accept them. Otherwise, Boehner-led Republicans will be on a collision course with Obama.
So what are the chances that the end result will be an actual decrease in federal non-entitlement, non-defense spending will actually go down?
History says the odds are not good. Other than the modest spending decline in 2010 as the stimulus spigot squeaked shut, the last time the federal budget actually went down was in 1965.
That year, federal spending dropped from $118.5 billion to $118.2 billion.
And there’s a reason spending hasn’t been cut since.
“You’re going to have special interests screaming,” Edwards says. “So it will be an interesting question whether they actually do it.”
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