Congress must do more to enforce a real debt ceiling
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With the national debt nearing $20 trillion, Congress simply must act to rein in spending. Common sense dictates that should be a precondition of any move to increase the debt limit yet again.

Instead, Senate Republican leaders are signaling willingness to pair a debt limit increase with a relaxation of the discretionary spending limits established by the 2011 Budget Control Act. The strategy aims to make it easier for lawmakers to swallow the bitter pill of a higher debt limit (not at all popular with the folks back home) by sweetening it with higher spending on both defense and nondefense programs (with vague murmurings of perhaps some offsetting cuts to mandatory spending.).

We’ve been here before. Congress last lifted the debt limit in November 2015 as part of the Bipartisan Budget Act (BBA), commonly known as the Obama–John BoehnerJohn Andrew BoehnerTrump's pick for Federal Reserve chief is right choice at right time The two-party system is dying — let’s put it out of its misery One year later, neither party can get past last year's election MORE budget deal. That agreement increased total discretionary spending by $80 billion over two years.

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The Budget Control Act of 2011 (BCA) placed caps on total and defense and non-defense categories of discretionary spending through fiscal year 2021. Due to amendments made to the BCA, total discretionary spending is set to fall below the fiscal year 2017 level in 2018, necessitating an actual cut of less than half of 0.01 percent. Yet the president and many in Congress agree that the BCA limits severely underfund defense; additional resources are needed to protect the U.S. and its allies.

 

Given lawmakers’ seeming antipathy toward even the most meager spending cuts, these factors will likely produce calls for a “budget deal” to increase both defense and non-defense spending in 2018 and beyond. Think “Obama-Boehner: The Sequel.”

Pacts that involve higher spending are always fiscally dangerous. Past budget deals have front-loaded spending, implementing increased outlays in the short term with promises of cuts that would follow later. The Obama-Boehner deal increased total federal outlays by $85 billion over its first three years, but provided no meaningful cuts until ten years out. Moreover, gimmicks prevented steeper real cuts. The Ryan-Murray deal that passed two years earlier followed a similar pattern.

Congress must resist the urge to raise the spending caps. Instead, it should boost defense spending as needed, offsetting those costs by reforming or eliminating demonstrably ineffective and duplicative domestic programs. Heritage’s “Blueprint for Balance” identifies $87 billion in such cuts that can be realized in one year alone.

If Congress succumbs to yet another bad deal that busts the BCA’s overall discretionary limit, any discretionary spending increases (including higher interest costs) must be fully offset by reforms to “mandatory” spending programs. Those reforms also must provide year-one savings. Otherwise, Congress should follow current law.

The debt limit is an animal all of its own. If it is not addressed separately, it should be dealt with as part of a broader budget package that addresses spending and tax reform through reconciliation.

The borrowing limit best serves its purpose if lawmakers see it as an important wake-up call to restrain rising spending and borrowing. Today, the public debt is about twice the historical average. The only fiscally responsible path is to control spending and debt before expanding Treasury’s ability to borrow again.

At nearly $20 trillion, debt subject to the limit exceeds what the U.S. economy produces in goods and services as measured by gross domestic product (GDP) annually. Excessive government debt puts a real drag on economic growth, restricting job creation, wage improvements, and business. If Congress and the president are to deliver sustainable economic growth of least 3 percent annually, they must enact spending reforms that control federal deficits and debt.

Instead of undermining the goals of the Budget Control Act, the debt limit, and a pro-growth agenda, Congress should pursue a budget that balances before the end of the decade. It should also commit to fiscal responsibility by enacting a statutory limit on all federal spending, enforced by sequestration (without exemptions!), with action-motivating deadlines and enforcement measures. As long as everything is on the table, the threat of automatic cuts will motivate deliberate reforms.

With a new Congress and president, this time must be different.

Romina Boccia is the deputy director of The Heritage Foundation’s Roe Institute for Economic Policy Studies. Justin Bogie is Heritage’s senior policy analyst in fiscal affairs.


The views expressed by contributors are their own and are not the views of The Hill.