Bad Debt Ceiling Solutions

by Matthew Glans on July 22, 2011

The debt ceiling debate and the issue of government spending has dominated the attention of the federal government for the last month. Both parties in Congress and President Obama have been unable to reach an agreement on how to approach the debt ceiling issue with a looming deadline and government default on the horizon. In a new article which recently appeared in the Frum Forum, Eli Lehrer, vice president for DC operations at The Heartland Institute tackles this important issue of government spending and the current cut, cap, and balance proposal being made by the GOP, which would cut spending to 18 percent of GDP.

“I’m sympathetic–even enthusiastic–about the idea of limiting federal government spending to 18 percent of GDP as many in the GOP say they want to do.   Although simply cutting “waste” won’t do it, some common sense reforms in entitlement programs combined with selected defense drawdowns could probably bring the budget to around that level. Over the next decade or so, it’s a good goal for reform-minded conservatives to support.”

In the article, Eli argues that while the cuts to spending are a good idea, the proposal to immediately cut spending would likely lead to politicians gaming a balanced budget amendment and “cheating” their way out of the hole with “off-budget expenditures” and “independent authorities.”

“The “Cut, Cap, and Balance” proposal now moving before the House–which would cut spending to 18 percent of GDP ($110 billion in total cuts right away) is an awful idea particularly when coupled with a balanced budget amendment. And it isn’t just the economic costs of rapid spending cuts (which I’m not sure would be as bad as some predict.) Instead, it’s the way Congress would behave: If the experience in the states is any guide, a need for sudden, rapid cuts in the budget will lead to Congress simply “cheating” its way out of the hole with “off budget expenditures” and “independent authorities.”

Eli’s Frum Forum article, “Balancing a Budget is Easy: Cheat,” can be found online at:

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