The Corner

Two Loopholes that Will Lead to More Spending

Over at the Heritage Foundation’s blog, Patrick Knudsen reports on two major loopholes in the debt-ceiling deal that will likely increase spending beyond the budget caps. Most of you won’t will be surprised:

Loophole No. 1, little noticed when the BCA was enacted, is called “disaster relief.” It allows Congress to “adjust” the BCA’s $1.043 trillion discretionary spending cap for fiscal year (FY) 2012—that is, to simply raise the limit—for weather events the President terms “disasters” (an exceptionally popular practice in the current Administration). In the text of the BCA law, the “disaster” amount is defined as the annual average of the past 10 years’ disaster funding; on that basis, the Office of Management and Budget has calculated it to be $11.3 billion for FY 2012. . . .

Then there is Loophole No. 2: In addition to the “disaster” funds, the BCA still retains the uncapped “emergency” credit card. So Congress could obligate all the $11.3 billion for “disasters” and still spend without limit later in the year on other “emergencies”—making a total mockery of the BCA spending caps.

These two flagrant gimmicks are among six spending limits exemptions in the BCA. The others are overseas military activities, technical changes in concepts and definitions, continuing Social Security disability reviews, and efforts to control health care fraud and abuse. But the disaster and emergency maneuvers are worse than the others, because they are so easy to abuse and because lifting the spending caps for them leaves more room to maintain status quo spending levels for everything else. Congress can pretend to be disciplined and claim austerity, but never really cut spending and reduce the size of government—demonstrating flagrant disregard for the budget crisis that the debt ceiling confrontation was supposed to address.

I wrote about the abuse of the emergency-spending loophole here.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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