Advancing a Free Society

How to Prevent Spending Cut Backsliding

Friday, August 5, 2011

The big risk to the Debt Control Act is that policymakers might believe that the back-end threat will be undone just before it bites.

The Joint Committee has a deficit reduction target: a range of $1.2 T – $1.8 T over 10 years. Because Committee membership is split evenly between the parties, and because Congressional Leaders have a structural incentive to appoint less flexible Members, the Joint Committee’s chance of success is not high to start.

If the Joint Committee fails, an across-the-board sequester will be triggered, automatically cutting spending by $1.2 T, cutting some programs (defense and nondefense discretionary, Medicare, farm programs, some ObamaCare spending) while exempting others (Social Security, veterans’ benefits, Medicaid and welfare programs, civilian and military retirement). The programs on the chopping block could be cut as much as 10% for defense, 8% for nondefense and ObamaCare, and 2% for Medicare.

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