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February 04, 2011

James Pethokoukis: Hey, Maybe Corker's CAP Is Useful

Did Congress routinely evade Gramm-Rudman debt limits? Sure.

But much fiscal good was done. Before the recession hit in 1990-91, the deficit had fallen to 2.8 percent of GDP from 5.1 percent, while the rate of annual discretionary spending (excluding social insurance programs) also had declined substantially.

Yes, that's true: Congress cheated its ass off but with Gramm-Rudman in place they were still limited and couldn't spend as much as they would have without it. (Though Pethokoukis ignores the fact that Gramm-Rudman forced Bush the Elder to raise taxes, and raising taxes, not just limiting spending, forced the deficit down -- a scenario Democrats always have in mind which we obviously don't prefer.)

Some other good things:

Based on Congressional Budget Office baseline forecasts, hitting the proposed Corker-McCaskill target would create a small projected surplus.

I'm inclined to ask In what year? 2063? but actually any plan that restores fiscal balance even that far out is preferable to the current plan of not having a plan and just going bankrupt. In fact, I think Ryan's own plan balances the budget... but not until 2063.

But even that reassurance of a year in the future when budgets will be balanced will have a positive impact on business and the economy.

Of course, this is all a big if, as Congress can vote to violate the law, even while claiming to be in compliance with it, whenever they like. As they did with Gramm-Rudman.

One more possible bonus: Because the law includes, for once, entitlements as budgetary areas that are subject to automatic cuts -- instead of how they are always treated, as "off-budget" and always immune to cuts -- this new law could force some sanguinary changes:

Some argue the cap is far too low given an aging U.S. population, rising healthcare costs and higher debt interest payments. Indeed, it would require a hefty 20 percent Medicare cut by 2025. But such reductions aren’t unreasonable, says the CBO, if Medicare was to be turned into a subsidized voucher program for seniors, as some Republicans propose.

... which is a key part of the Ryan Roadmap.

Instapundit wrote to Corker yesterday and Corker defended his plan. About his 20.6% of GDP spending cap:

In addition, he notes that this is a lower number than either the Deficit Commission, or the Ryan roadmap (which he calls “great”) will achieve by 2022. The President’s commission would cut about $4 Trillion from the baseline budget; this would cut $7.8 Trillion. The difference, he says, compounds over time. “If we can do more, I’ll be the first to vote for it.”

It's probably better than I at first thought. I thought it might be useful but, as I said, only in conjunction with other spending cuts to happen now, and not as a replacement for such cuts. Maybe I can upgrade it to more useful than I thought but still we're going to need present action.

Congress has a very bad habit of expecting future Congresses to become all grown-up and serious-minded and courageous and do all the things the present Congress is too compromised and cowardly to do -- but future Congresses are just as compromised and cowardly. Time has proven it -- in fact, Congresses have become less responsible every generation.

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posted by Ace at 02:55 PM

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