Discretionary spending caps included in debt-ceiling deal
Updated: Wednesday, August 10th, 2011 | By Louis Jacobson
House Republicans promised during the 2010 election to "set strict budget caps to limit federal spending on an annual basis." With enactment of the debt-ceiling deal on Aug. 2, 2011, they achieved that goal.
According to a Congressional Budget Office analysis of the bill, the Budget Control Act of 2011 -- as the debt ceiling deal was called -- "would impose caps on appropriations of new discretionary budget authority that start at $1,043 billion in 2012 and reach $1,234 billion in 2021.” Discretionary spending refers to outlays that are appropriated by Congress and are not determined by a pre-set formula.
CBO added that the caps "would not apply to spending for the wars in Afghanistan and Iraq and for similar activities, sometimes referred to as overseas contingency operations, or to certain amounts of additional spending for "program integrity” initiatives, for which the act would allow upward adjustments to the caps by specified amounts. In addition, the legislation provides for adjustments to the caps in each fiscal year to account for funding designated for emergency requirements and disaster relief. The cap adjustments for disaster relief would be limited to amounts based on historical averages for such funding.”
In addition, the bill established a Congressional Joint Select Committee on Deficit Reduction tasked with reducing the deficit by at least $1.5 trillion between 2012 and 2021. If it doesn't succeed in making these additional cuts, the bill would require cuts by Jan. 15, 2012 to make up for any shortfall in that targeted savings. "Those automatic reductions in spending would be spread evenly over the fiscal years 2013 through 2021; half would come from defense spending and half from nondefense spending, including both discretionary and direct spending,” CBO said.
This approach differs somewhat from the bill that passed the House before being rejected by the Senate. The House-passed bill, known as "cut, cap and balance," would have cut discretionary spending, capped future spending, and promoted a balanced budget amendment to the Constitution, which would have been passed separately. The cap on future years was set at 18 percent of Gross Domestic Product. GDP is a common measure of the overall size of the economy. The cap would have exempted spending on Social Security, Medicare, veterans benefits and interest on the debt.
We asked Steve Ellis, vice president of the non-partisan budget group Taxpayers for Common Sense, if he thought the enacted bill qualifies as a Promise Kept. He said it did. We agree. We rate this a Promise Kept.
Congressional Budget Office, analysis of the debt-ceiling deal, Aug. 1, 2011
E-mail interview with Brendan Buck, spokesman for House Speaker John Boehner, Aug. 9, 2011
E-mail interview with Steve Ellis, vice president of Taxpayers for Common Sense, Aug. 10, 2011
Senate kills 'cut, cap and balance'
Updated: Friday, July 22nd, 2011 | By Angie Drobnic Holan
House Republicans promised they would set a "hard cap" on discretionary spending, and on Tuesday, such a measure did pass in the U.S. House of Representatives. But the measure died in the Senate.
The bill, known as "cut, cap and balance," would have cut discretionary spending, capped future spending, and promoted a balanced budget amendment to the Constitution, which would have been passed separately.
The cap on future years was set at 18 percent of Gross Domestic Product. GDP is a common measure of the overall size of the economy. The cap would have exempt spending on Social Security, Medicare, veterans benefits, or interest on the debt.
The "cut, cap and balance" bill passed the House on a vote of 234 to 190 on July 19, 2011. But the Senate voted it down on a party-line vote, 51-49, on July 22. Additionally, President Barack Obama had vowed he would veto the bill if it did pass.
So is a hard cap on spending dead? Not necessarily.
A proposal to address the nation's debt problems from six senators known as the Gang of Six includes a cap on discretionary spending. That proposal hasn't come up for votes in Congress, but it's being widely discussed in Washington as part of a compromise to raise the debt ceiling by Aug. 2, 2011, an important looming deadline.
A cap might be included in other legislation going forward, and the fact that "cut, cap and balance" passed the House would be a positive sign for that, said Steve Ellis, vice president of Taxpayers for Common Sense, an independent group that analyzes federal spending.
"Certainly getting a majority of the House supporting it indicates that the idea is alive and will be as long as we are in this deep fiscal quagmire," he said.
The U.S. House of Representatives did pass a hard cap on new spending, but it did not pass the Senate. We don't think a spending cap is dead, but it has been dealt a blow. So for the time being, we rate this promise Stalled. We'll be watching in the next two weeks and will change the rating if the cap re-emerges in a final plan.
THOMAS, HR 2560: Cut, cap and balance, accessed July 21, 2011
Clerk of the U.S. House of Representatives, Vote on 'cut, cap and balance,' July 19, 2011
The White House, Statement of administration policy, H. R. 2560 – Cut, Cap and Balance Act of 2011, July 18, 2011
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