Continuing Resolution Looms When Congress Returns

In two and a half weeks, Congress will return to Washington, D.C. Unfortunately, due to the failure of the Senate Democrat leadership to take up House bills and to act responsibility, Congress will be once again under Democrat leadership will be faced with a decision on how to fund the government after Sept. 30.

Two years ago, Washington came together in a historic bipartisan compromise to reduce out-of-control federal spending, helping to achieve the first federal deficit below $1 trillion since President Obama took office. But that was only the beginning. Now is not the time to revert back to Washington’s culture of wasteful spending and lack of accountability; taxpayers deserve better. Any effort to remove these bipartisan spending restraints is irresponsible and a step backward. Congress should pass funding consistent with the agreed upon annual spending levels and the president should use his authority to allocate spending cuts in an appropriate manner.

The Budget Control Act of 2011 (BCA), a bipartisan bill signed into law by President Obama, enacted caps on discretionary spending. OMB has determined that discretionary spending will be capped at $967 billion in FY 2014. Congress must pass a continuing resolution at the end of September (end of fiscal year 2013) that abides by these established caps. If Congress kicks the can down the road by passing a continuing resolution that exceeds the statutory cap, it will effectively set up another round of across-the-board sequester cuts in January rather than addressing the issue now. According to the Congressional Research Service, discretionary appropriations that result in a “breach in discretionary spending caps” will trigger sequestration within “15 calendar days after the end of a session of Congress.” This means that instead of Congress and the president actually managing cuts or spreading the spending reductions across 12 months, the cuts will be compressed into 8 1/2 months. Just as President Obama rejected the opportunity to find smarter cuts, Congress also seems averse to making the tough decisions – and compressing the impact of the cuts will only make it worse.

As Congress continues its work on discretionary spending bills, it should ensure no portion of FY 2014 spending exceeds the BCA level of $967 billion.

In addition to the bipartisan majorities in the House and Senate and President Obama taking this good first step toward reining in unchecked spending, there was the Obama administration proposed the sequester. When first proposed, the debt had grown by $3.7 trillion in two-and-a-half years. Since taking office, the debt has grown by an unsustainable $6 trillion in five years.

While there is still much more work to be done, any effort to undo the Budget Control Act would be a major step backward. The decision to delay sequestration – which amounted to three cents on the dollar in cuts – in 2013 increased uncertainty and left bureaucrats to manage the reductions.
Background on Sequestration
First, President Obama Vowed to Enforce the Sequester Levels
In November 2011,  when the so-called “Supercommittee” failed to adopt a budget plan, President Obama promised that he would stand against any effort to increase the sequester spending levels. “Already, some in Congress are trying to undo these automatic spending cut,” the president said, “My message to them is simple: No. I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off ramps on this one.” (President Barack Obama, “Statement by the President on the Supercommittee,” White House Office of the Press Secretary, 11/21/11)

Then, President Obama Threatened To Veto The Opportunity To Make Smarter Cuts:
Washington Examiner: “White House Threatens To Veto Bill That Gives Obama Flexibility On Implementing Sequestration.” “President Obama prefers the ‘meat cleaver’ approach of sequestration to any policy that would allow him to implement the spending cuts more selectively, as his administration threatened to a Republican proposal to that effect because it does not include a tax increase.” (Joel Gehrke, “White House Threatens To Veto Bill That Gives Obama Flexibility On Implementing Sequestration,” The Washington Examiner, 2/28/13)

Even Under The Sequester, Spending Will Continue To Steadily Increase:
CBO: Under Sequester Spending Continues To Increase: "With those reductions, the overall limit on discretionary budget authority will steadily increase from $967 billion for 2014 to $1,147 billion for 2021, for an average annual increase of 2.5 percent. The separate defense and nondefense caps will follow a similar pattern. The cap on discretionary budget authority for the defense category will grow from $498 billion for 2014 to $590 billion for 2021, CBO estimates. The cap on non defense funding will increase from $469 billion for 2014 to an estimated $557 billion for 2021." (Sequestration Update Report: August 2013, Congressional Budget Office, 8/8/13)This time around, lawmakers and the Obama administration should plan for the minimal spending reductions they have already agreed to and enact them now. Government overspending is among the biggest impediments to economic prosperity, and we must continue on the path toward spending reductions to ensure a full recovery.

The Congressional Budget Office (CBO) has repeatedly warned that eliminating sequester spending cuts would weaken the economy in the long-term and potentially lead to a fiscal crisis. The CBO also has been consistent on the 'Need To Cut Spending":
NOVEMBER 2012: The CBO – In Analyzing The Then-Looming "Fiscal Cliff" – Projected That "Continuing Current Policies Would Lead To Faster Economic Growth In The Near Term But A Weaker Economy In Later Years." "CBO projects that the significant tax increases and spending cuts that are due to occur in January will probably cause the economy to fall back into a recession next year, but they will make the economy stronger later in the decade and beyond. In contrast, continuing current policies would lead to faster economic growth in the near term but a weaker economy in later years." ("Choices For Deficit Reduction," CBO, 11/8/12)

FEBRUARY 2013: "Although CBO Expects That Reducing The Amount Of Fiscal Tightening This Year Would Strengthen The Economy In The Short Term, The Resulting Increase In Federal Borrowing Would Weaken The Economy In The Longer Term Unless Other Changes In Spending Or Tax Policy Were Made To Offset That Additional Borrowing." (Wendy Edelberg, "Automatic Reductions In Government Spending -- AKA Sequestration," CBO, 2/28/13)

JULY 2013: "Although Output Would Be Greater And Employment Higher In The Next Few Years If The Spending Reductions Under Current Law Were Reversed, That Policy Would Lead To Greater Federal Debt, Which Would Eventually Reduce The Nation’s Output And Income Below What Would Occur Under Current Law." "Although output would be greater and employment higher in the next few years if the spending reductions under current law were reversed, that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law. Moreover, boosting debt above the amounts projected under current law would diminish policymakers’ ability to use tax and spending policies to respond to unexpected future challenges and would increase the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates)." (Douglas W. Elmendorf, "How Eliminating The Automatic Spending Reductions Specified By The Budget Control Act Would Affect The U.S. Economy In 2014," CBO, 7/25/13)The American people are on the side of lawmakers who seek a culture of fiscal responsibility. Majorities of Americans believe the government spends too much, know there’s room to cut, and observe Washington being wasteful and reckless with tax revenue and borrowed money. Americans will reward the lawmakers who stand up for prudence, stewardship, and responsibility in Washington.

Americans are pessimistic about the economy, but they are not looking for Washington to continue the same failed attempts to revive it.

When politicians argue that cuts to government spending are the reason for job losses that means Washington has fostered conditions that stifle private-sector job creation and business growth.

A short-term continuing resolution will buy time for the GOP and the president to work on a better way to implement cuts, but it should not delay the inevitable spending reductions. Sequester spending levels for 2014 should apply to the entire fiscal year.

Ultimately, Congress and the president must address the looming entitlement crisis. The longer Washington waits to address these massive and expensive programs, the more difficult the solutions become. Real reform must be structural and constrain costs.

Nearly five years after the so-called stimulus, there is no evidence showing that government spending creates long-term growth or permanent jobs. Approaching a weak economy with the same failed efforts would yield the same failed results.

Reducing spending isn't about gutting the government of essential services it provides. Rather, it’s about making government more efficient, effective, and accountable.

Congress and the Obama administration needs to make sure every dollar spent is being used as efficiently and effectively as possible so that we strengthen these programs for those who need them now and preserve them for future generations.

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