RIEDL: A blueprint to rein in spending in 2011

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ANALYSIS/OPINION:

Voters sent a clear message to Washington on Nov. 2 that they are fed up with runaway spending, bailouts and deficits. In the past three years, the budget has leapt by $727 billion to $3.5 trillion — or nearly $30,000 per household.

Over the next year, at least four opportunities will arise to impose spending restraint. Conservatives (of both parties) should come together and seize these moments.

1) House rules. Restraining federal spending is difficult enough even without taking into account a budget process rigged in favor of higher spending. The new House rules package will give the 112th Congress an opportunity to create budget rules reflecting America’s new budget priorities.

A responsible rules package would ban earmarks and require a supermajority vote to expand entitlements. It would require that any new federal program be accompanied by the termination of an existing program. It would prevent Congress from declaring regular spending “emergencies” to evade budget limits.

Finally, the House should end “base-line budgeting” rules that assume permanent growth in discretionary spending. It also should require that the tax base line assume expiring tax cuts continue, just as the current spending base line assumes expiring entitlement programs will continue.

The House can implement its own rules unilaterally without the approval of the Democratic Senate or President Obama. These rules will remove much of the bias toward runaway spending and deficits.

2) Fiscal 2011 appropriations. Though the lame-duck Congress may complete all fiscal 2011 discretionary-spending bills in early December, it is more likely to punt all spending decisions to the next Congress.

If that happens, the next Congress should simply pass a full-year continuing resolution keeping discretionary spending at 2010 levels. That would prevent the $30 billion increase the Democratic Congress planned and kill all planned earmarks for the year. Quickly wrapping up the fiscal 2011 spending bills will help Congress focus on crafting larger reforms in the fiscal 2012 budget.

3) The debt limit. The federal government is expected to hit the $14.3 trillion debt limit in late spring. Although current debt levels are unjustifiable, not raising the debt limit would risk defaulting on federal debt and unnecessarily panicking the financial markets. However, this must-pass legislation also provides an opportunity for budget reform.

The “Dick Gephardt rule” allows the House to avoid a direct vote on the debt limit — the vote on the budget resolution automatically doubles as a vote to raise the debt limit. Yet transparency demands that the House repeal the Gephardt rule and instead require a true stand-alone vote to raise the debt limit. That vote also could achieve positive budget reforms.

Any budget-process reform that requires a new law (rather than just a change in rules) can be attached to debt-limit legislation. For instance, Congress could add legislation limiting the growth of all government spending to a pre-set formula, such as the inflation rate plus population growth. A more modest proposal would provide multiyear discretionary spending caps. Lawmakers also could take Social Security and Medicare off autopilot by creating a long-term binding budget for these programs.

In addition to a budget-process reform, lawmakers could attach a package trimming fiscal 2011 spending. An easy target would be any spending authority that agencies still have not used at least three years after receiving it. Together, these budget reforms can add strong fiscal responsibility reforms to a debt-limit vote.

4) The fiscal 2012 budget resolution. The new budget resolution will provide the first chance for the 112th Congress to lay out its full vision on taxes and spending. A responsible budget blueprint should accomplish three things:

First, it should include significant immediate spending cuts. The Heritage Foundation has laid out $343 billion in proposed spending cuts for FY 2012. Enacting even half of them would be a good start.

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