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CUTS VERSUS BIGGER CUTS: With Congress Beginning Work on Last Year’s Spending Bills, Only Certainty Is Reduced Spending, Question Is: How Much?

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“As House Republicans pledged—and voted to affirm on the House floor last week—the spending limits will restore sanity to a broken budget process and return spending for domestic government agencies to pre-stimulus, pre-bailout [2008] levels.”

At the end of last year, members of Congress were unable to come to an agreement on the final appropriations bills that would determine Fiscal Year (FY) 2011 spending levels for the U.S. Department of Education and other federal agencies. To keep these programs running, Congress passed a continuing resolution (CR) that funds these programs through March 4, 2011. Now, as Congress works on finishing last year’s business, it is becoming evident that many government programs will receive less funding this year than they received last year.

Under a budget plan released last week by House Budget Committee Chairman Paul Ryan (R-WI), spending for FY 2011 would be capped at $1.055 trillion—a $35 billion cut from last year’s levels. The plan would provide $420 billion for all domestic discretionary spending, which includes everything except spending for defense, homeland security, veterans, and military construction. That total represents a cut of $43 billion compared to the previous year. Ryan’s plan would boost security spending by $8 billion compared to the previous year.

“Washington’s spending spree is over,” Ryan said in a February 3 statement. “As House Republicans pledged—and voted to affirm on the House floor last week—the spending limits will restore sanity to a broken budget process and return spending for domestic government agencies to pre-stimulus, pre-bailout [2008] levels.”

Following Ryan’s announcement, House Appropriations Committee Chairman Hal Rogers (R-KY) outlined spending levels for each of the twelve Appropriations subcommittees. The Labor, Health and Human Services, and Education Appropriations Subcommittee will receive $157 billion, a cut of $6.6 billion, or 4 percent, compared to last year, but a 7 percent cut compared to the president’s budget request for FY 2011. Other cuts were much deeper, including a 17 percent cut for transportation and housing programs compared to last year; a 16 percent cut for the departments of Justice, Commerce, and State; 14 percent for agriculture, rural development, and the Food and Drug Administration; 13 percent from the Treasury; and 10 percent from energy and water programs.

“I am instructing each of the twelve Appropriations subcommittees to produce specific, substantive, and comprehensive spending cuts,” Rogers said. “We are going go line by line to weed out and eliminate unnecessary, wasteful, or excess spending—and produce legislation that will represent the largest series of spending reductions in the history of Congress. These cuts will not be easy, they will be broad and deep, they will affect every congressional district, but they are necessary and long overdue.”

Members of the respective subcommittees will decide how to divvy up the spending cuts among the individual programs under their jurisdictions in the coming days. During the next step in the process, each of the subcommittees’ bills will be rolled into a single stand-alone bill. The stand-alone bill will outline the funding total for every program and is scheduled to be considered on the House floor during the week of February 14.

Once the bill is on the House floor, it will be subject to amendments that could possibly reduce spending even further as some Republicans have proposed. For example, Republican Jim Jordan (R-OH), Chairman of the Republican Study Committee, introduced the Spending Reduction Act of 2011, which would cut $2.5 trillion over ten years from the federal budget, including nearly seventy education programs. Additionally, Representative Jeff Flake (R-AZ) said that doing anything short of cutting $100 billion in FY 2011 would be “getting off on the wrong foot,” adding, “We’re going to have to do much better and cut much more.”

After the bill passes the House of Representatives, it will go to the Senate where Democrats control fifty-three seats and are already dismissing the plan as “unworkable,” in the words of Senate Majority Leader Harry Reid (D-NV)Senate Budget Committee Chairman Kent Conrad (D-ND) said he was not sure whether a budget-cutting measure could pass the Senate.

Senate Majority Whip Richard Durbin (D-IL) urged caution with spending cuts, saying that cuts would need to be made in a way that would not hurt economic recovery. “Let’s do it in a sensible fashion, so that we don’t kill the recovery and we don’t stop the basic services of government,” said Durbin.

One possible alternative to the House approach is a bipartisan effort led by Senators Bob Corker (R-TN) and Claire McCaskill (D-MO) that would cap spending starting in FY 2013. Their proposal would gradually cut discretionary and mandatory spending each fiscal year over the next ten years until federal expenditures fall below 21 percent of the nation’s gross domestic product (GDP); currently federal spending is approaching 25 percent of GDP. If Congress fails to meet the annual cap, the bill would authorize the Office of Management and Budget to make evenly distributed, simultaneous cuts throughout the federal budget to bring spending down to the predetermined level. Corker and McCaskill’s proposal has already drawn support from several Republicans, but no Democrats other than McCaskill have signed on.

On the other side of the aisle, Senate Minority Leader Mitch McConnell (R-KY) said that there will be “extraordinary republican unity” behind efforts to trim spending and is hopeful that some of the more than twenty democratic senators who are up for reelection in 2012 will side with Republicans. “We are going to do everything we can to unify Senate Republicans around it and pick off enough Senate Democrats to send it to the president,” he said February 4 on the Laura Ingraham radio show.

Like in the House, there is some support in the Senate for a reduction in spending that would go further than Ryan’s plan. In a February 4 letter to House Speaker John Boehner (R-OH), a group of eleven republican senators called on the House to make spending cuts totaling no less than $100 billion. “Since the Democrats still control the Senate, we need the House-passed CR to be as bold as possible in order to strengthen the hand of Senate conservatives in increasing or maintaining the spending reductions,” the letter reads.

With the current CR due to expire on March 4, it is possible that Congress will need to pass another CR to extend the deadline and give the House and Senate more time to work on a compromise that can pass both chambers and be signed into law by the president.

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