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Greenstein on “Cut, Cap, and Balance Act”

| By CBPP
The Center has issued a statement on the “Cut, Cap, and Balance Act,” which the House will consider tomorrow.  Here’s the opening:

The “Cut, Cap, and Balance Act” . . . stands out as one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades.  It would go a substantial way toward enshrining Grover Norquist’s version of America into law.

  • The plan would lock in cuts over the next ten years at least as severe as those in the Ryan budget plan that the House passed in April, by writing spending caps into law at the year-by-year levels of spending (as a share of GDP) the Ryan budget contains.
  • It also would hold the increase in the debt limit needed by August 2 hostage to approval by two-thirds of the House and the Senate of a constitutional amendment to require a balanced budget every year while effectively barring any increases in revenues.  The constitutional amendment would make all revenue-raising measures unconstitutional unless they secured a two-thirds supermajority in both the House and the Senate.
  • The “Cut, Cap & Balance” measure cites three constitutional balanced-budget amendments (H.J. Res 1, S.J. Res 10, and H.J. Res 56) and states that Congress must approve one of them or a similar measure before the debt limit can be raised.  All three of the cited proposals would require cuts deeper than those in the Ryan budget.  All three measures would establish a constitutional requirement that total federal expenditures may not exceed 18 percent of GDP, and all three would essentially require that the budget be balanced within the coming decade.The Ryan plan, by contrast, does not reach balance until the 2030s, and its federal spending level is just below or modestly above 20 percent of GDP for most of the next two decades, equaling 20¾ percent of GDP in 2030 for example, according to the Congressional Budget Office.  The only budget that comes close to meeting the requirements of these constitutional amendments is the Republican Study Committee budget, which eliminates 70 percent of non-defense discretionary funding by 2021, contains deeper Medicare cuts than the Ryan budget, cuts Medicaid, food stamps, and Supplemental Security Income for the elderly and disabled poor in half by the end of the decade, and raises the Social Security retirement age to 70.
  • The “Cut, Cap, and Balance Act” would require cuts totaling $111 billion immediately, in the fiscal year that starts 75 days from now, despite a 9.2 percent unemployment rate.  These cuts would equal 0.7 percent of the projected Gross Domestic Product in fiscal year 2012 and would thus cause the loss of roughly 700,000 jobs in the current weak economy, relative to what the number of jobs otherwise would be.
  • The bill overturns a feature of various bipartisan budget laws over the past quarter century, by subjecting programs for the poorest Americans to the specter of meat-axe across-the-board cuts.  It does so even as it protects tax breaks and tax subsidies for the wealthy and powerful by erecting a constitutional barrier to any measure that would raise any revenue.
Click here for the full statement.