February 27, 2015 | Commentary on Budget and Spending, Spending Cuts

3 steps the new Congress should take to control spending and debt

The new Congress has an opportunity to rein in growing spending and debt. They should seize it.

Last year, lawmakers waived the debt limit to March 2015, then remained largely silent about the economic dangers posed by excessive federal spending and debt. The new Congress needs to address these issues with the seriousness they deserve.

In a joint op-ed published the day after the elections in The Wall Street Journal, Speaker John Boehner (R-Ohio) and current Senate Minority Leader Mitch McConnell (R-Ky.) promised to address "a national debt that has Americans stealing from their children and grandchildren, robbing them of benefits that they will never see and leaving them with burdens that will be nearly impossible to repay."

The national debt is approaching $18 trillion and will continue growing from there. As a share of the economy, the debt makes up nearly three-quarters of gross domestic product. Massive and growing debt hinders economic growth and opportunity by discouraging investment and threatening higher future taxes to pay interest on the debt. This is especially harmful to younger, working generations, including millennials. If Republicans want to get the economy going and keep it going, they must contain both spending and debt.

There are three main steps Congress should take to accomplish this:

1. Reform the Big Three entitlement programs – Medicare, Medicaid and Social Security.

 Nearly all the growth in government spending over the last 40 years is due to growth in entitlement programs. Over the next decade, 85 percent of the growth in government spending is due to entitlement spending and interest on the debt. Looking out even further, Congressional Budget Office alternative fiscal projections suggest that entitlement spending coupled with net interest on the debt could exceed all projected tax revenues by 2030. Congress should reform entitlement programs in a way that focuses assistance on those who are truly in need and discourages permanent dependence on the welfare state.

2. Arrest duplicative, wasteful and outside-the-proper-sphere-of-the federal-government spending.

When citizens note examples of how and where the government wastes tax dollars, it is easy to understand why a recent report suggested Americans think Washington wastes nearly 51 cents of every dollar it spends. A specifically dedicated, independent commission with the charge to eliminate waste, cut programs that are outside the proper scope of the federal government and consolidate duplicative programs could help Congress eliminate waste and control government spending. Encouragingly, House Majority Leader Kevin McCarthy (R-Calif.) recently made reference to such a commission to Politico, which reported: "And that's why he is setting up a congressional mechanism to whittle away at inefficiencies that plague the government. He likens his plans to the commission that shut down underused military bases."

3. Control spending with firm caps.

The Budget Control Act of 2011 (BCA) implemented discretionary spending caps through 2021. Although Congress acted to weaken the caps several times, the BCA nevertheless helped to return discretionary spending to the pre-stimulus level, after adjusting for inflation. Spending caps that limit spending growth to the rate of inflation encourage Congress and federal agencies to operate more efficiently and prioritize spending in the public interest. Prioritizing under firm spending caps means that when priorities arise that require funding, instead of resorting to the "emergency" loophole to increase spending above the allowed caps, Congress reduces spending in less essential areas to fund what's important. This is common sense. Nevertheless, it seems like no crisis comes without a request to ignore fiscal discipline. President Obama's Ebola virus emergency funding request is merely the latest example.

Controlling federal spending and the national debt demands courage and leadership from the new Congress. The reward will be a more prosperous economic future that benefits all Americans.

 - Romina Boccia is the Grover M. Hermann Fellow in Federal Budgetary Affairs in the Roe Institute for Economic Policy Studies.

 - Spencer Woody, a member of the Heritage Young Leaders program, contributed to this piece.

About the Author

Romina Boccia Deputy Director, Thomas A. Roe Institute for Economic Policy Studies and Grover M. Hermann Research Fellow
Thomas A. Roe Institute for Economic Policy Studies

Originally appeared in The Hill