In 2011, Congress faced an impasse on raising the debt limit. It was the first year of a new Republican House majority and the third year of a spendthrift Obama administration.
It’s a myth that the impasse caused Standard and Poors to downgrade the nation’s Triple-A credit rating. S&P had warned explicitly for months that Congress had to reduce its projected deficit by $4 trillion over ten years, or face a credit downgrade. Congress responded with the Budget Control Act, which suspended the debt limit and cut the projected deficit by less than half that amount. Standard and Poors promptly made good on its threat.
I voted against the Budget Control Act because it failed to preserve the nation’s triple-A credit rating. It seemed clear at the time.
Nevertheless, the BCA turned out to be the most meaningful – indeed, the only – true constraint on federal spending in the years that immediately followed. Although it made disappointingly small cuts in current spending, it included an across-the-board sequestration mechanism that kicked in automatically when Congress failed to enact the targeted deficit reductions.
In the years that followed, I found myself defending the BCA’s sequestration provisions from bi-partisan efforts to bypass them. My vote against the BCA became the one I most regret over 15 years serving in Congress. True, it didn’t do enough to preserve our credit. But it did more to constrain federal spending than any other act since then.
I’m not going to repeat that mistake with the new agreement.
Like the BCA, there’s a lot for Republicans not to like in the Fiscal Responsibility Act. For openers, like the BCA, it only reduces current spending slightly, by clawing back tens of billions of dollars of unspent covid funds and other recissions. It’s a pittance compared to the unsustainable run-up in spending during the covid hysteria.
Like the BCA, this agreement suspends the debt limit until after the next election – perhaps as much as $4 trillion. That’s excessive, but the debt is not the problem. The debt is a direct result of over-spending. Once government has spent a dollar, the only choice is to raise taxes, print money, or borrow. In short, it’s the spending, stupid.
That’s the fine point of the matter. Like the BCA, the FRA places real constraints on future spending, making it the most important victory for fiscal conservatives in more than a decade. This agreement puts in place changes that will confine spending growth to one percent a year for the next six years if done by appropriation (the 12 annual spending bills) – and requires a one percent reduction if done by continuing appropriation (the omnibus abominations).
It will reduce welfare spending by increasing the work requirements for able bodied adults collecting SNAP and TANF benefits. By reducing environmental reviews to two years, it sets the stage for increased energy production, new water storage and forest management, highway construction – in fact, every infrastructure project now delayed by endlessly time consuming and ultimately cost-prohibitive environmental reviews. It will constrain future regulatory costs imposed by the executive agencies by subjecting them to offsetting regulatory savings. It prevents the administration from adding abusive IRS agents in the coming year. If the Supreme Court rules against the President’s arbitrary student loan forgiveness, as anticipated, it prevents the President from circumventing it by pausing repayments indefinitely. That’s nearly a trillion dollars in taxpayer savings right there.
Republicans shouldn’t compare it to the perfect. Our system of government was never designed to make perfect legislation. They shouldn’t compare it to the Limit, Save and Grow Act that was negotiated and agreed to solely among House Republicans. With both a Senate and President of decidedly different views, the outcome is always going to be a disappointment compared to what a purely-Republican bill would do.
Republicans should instead compare it to the alternative.
Clearly, this administration intends to use a failure to increase the debt limit in the most destructive way that it can, in a calculated effort to create panic in credit rating agencies and capital markets and then push through ruinous measures of their choosing. Events will unfold very quickly, and in a state of financial and political panic, the enormous gains made possible by this bill will be swept away.
If we are going to save our country, Republicans need to get a lot worse at snatching defeat from the jaws of victory. Passing the FRA would be a good start and set the stage for additional victories to come.