If Republicans lose control of Congress this November, it will be in part because voters saw them as a party of spendthrifts. There is little reason to think a Democratic majority would be better, and much reason to think it would be worse. Even so, today’s GOP–which has superintended a 23-percent increase in real spending over the past six years–has strayed far indeed from the Contract with America.
How fortunate, then, that Senate Budget Committee chairman Judd Gregg is giving his party a chance to redeem itself before the midterm elections. Recognizing that much of what’s wrong with the way Washington spends money is a product of the budget process itself, Gregg has proposed a series of reforms to that process. His legislation–the Stop Over-Spending (S.O.S.) Act–is one of the most encouraging efforts toward spending discipline in years, and is eminently worthy of passage.
Congress has been especially profligate on the matter of discretionary spending. Spending caps in effect from 1990 to 2002 largely held discretionary spending in check, but since then it has grown by 9 percent a year. The S.O.S. Act would bring back the caps, starting at $873 billion in fiscal year 2007 and rising by 2.6 percent in 2008 and 2009. If discretionary spending passed these limits, the Office of Management and Budget would be empowered to bring it under control by making across-the-board cuts.
But it is entitlements that pose the greatest fiscal threat. Medicare and Social Security rush toward insolvency like a train hurtling toward a cliff’s edge–and Congress’s response has mainly been to sip tea in the dining car. Perhaps the most valuable provisions of the S.O.S. Act, then, are those that address entitlement spending.
One such provision would set deficit targets and require budget committees to reduce entitlement spending if the deficit is expected to exceed them. (The targets start out at 2.75 percent of GDP in 2007 and decline to 0.5 percent by 2012.) If the committees fail to make cuts, automatic reductions in entitlement spending (with the exception of Social Security) would take effect. One shortcoming of this approach is that an economic downturn would automatically increase the size of the deficit relative to GDP. Linking spending reductions to deficit levels might also discourage future tax cuts. A better alternative, which Brian Riedl of the Heritage Foundation has suggested, would be to tie the cuts to spending growth rates or entitlement-spending levels. We hope to see the S.O.S. Act amended accordingly, but by requiring lawmakers to take account of entitlement growth, it’s already on the right track.
It also contains a provision targeting runaway Medicare costs: If more than 45 percent of those costs were covered by general revenue (as opposed to payroll taxes and fees), a point of order against entitlement expansions would take effect until that figure dropped back below 45 percent. Additionally, the bill would create a commission charged with making recommendations on bringing Social Security and Medicare into long-term solvency.
A second commission would review all federal agencies and programs. Many of these cling to life with vampiric tenacity despite having long accomplished the ends for which they were created. The panel would make recommendations on the elimination of unnecessary programs, and Congress would have to accept or reject these recommendations as a package (in order to keep lawmakers from vying to save their favorite boondoggles).
Other main provisions include giving the president a line-item veto that would allow him to send rescission requests to Congress for an up-or-down vote, and introducing a biennial budget process. Moving away from the present, annual process would free Congress to spend more time on oversight and reform of federal programs.
Each of these reforms is eminently sensible. Whether Congress will rouse itself to pass them is an open question. Similar reform packages have been difficult to get through the House, causing some conservative representatives to prefer a tactic of passing the reforms one at a time. So it was with the earmark reform earlier this year. In the same vein, Wisconsin congressman Paul Ryan is sponsoring a House bill to give the president a line-item veto. (Watch for a House vote on his bill this Thursday.)
But while there’s nothing wrong with an incremental approach, the S.O.S. Act gives the GOP a chance to put itself on the record making a strong statement of its commitment to spending restraint. Right now, it isn’t clear that this statement will be forthcoming anytime soon. Senator Gregg thinks floor action before July 4 is unlikely, and majority leader Bill Frist has been noncommittal about when a vote might happen. For the sake of his majority, he should strive to make it sooner rather than later.