With the Treasury Department’s Aug. 2 deadline for raising the debt ceiling a little more than two weeks away, House Republicans reaffirmed their commitment on Monday to introduce a proposal requiring Congress to approve a balanced-budget amendment to the Constitution before raising the debt ceiling.
The White House formally threatened to veto the measure, which House Republicans plan to bring to the floor on Tuesday.
The bill—sponsored by Rep. Jason Chaffetz (R-Utah) and known as the “Cut, Cap, and Balance Act of 2011” (H.R. 2560)—would cut fiscal year 2012 federal government expenditures by $111 billion.
The bill proposes to achieve this through reducing non-security discretionary spending by $76 billion, and cutting non-veteran-, non-Social Security-, and non-Medicare-related mandatory spending by $35 billion.
In terms of capping federal spending, the bill would implement a series of gradually decreasing federal spending caps, starting with 22.5 percent of GDP for fiscal year 2012 and eventually achieving a final goal of 19.9 percent of GDP by the year 2021.
Perhaps most importantly, it also proposes a balanced-budget amendment to the Constitution that would have to pass a two-thirds House vote before being submitted to the states for ratification.
The bill has particularly garnered much support from the Tea Party wing of Republican congressmen. In an interview on the C-SPAN Sunday talk show “Newsmakers,” Rep. Jim Jordan (R-Ohio) voiced his support for the bill, and stated that the measure, if passed, would fundamentally change politics in Washington.
“If we could actually accomplish that, that would truly, fundamentally change the way we do things in Washington, and change the country in the right way, and help us get our fiscal house in order, and put us, frankly, on a fiscal path that’s actually sustainable,” said Jordan, chairman of the Republican Study Committee caucus.
In a Statement of Administration Policy released by the Office of Management and Budget, President Barack Obama denounced the measure, describing it as unnecessary and unrealistic.
“Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility,” said the president. “Increasing the federal debt limit, which is needed to avoid a federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions.”
The president also voiced concern over the effect that the bill’s proposed cuts to the entitlement programs of Medicare and Social Security would have on the country’s most vulnerable and needy citizens.
Despite all the rhetorical pugilism surrounding the Cut, Cap, and Balance Act of 2011, it is unlikely that the bill will pass into law, given the Democratic majority in the Senate.
Although balanced-budget amendments for the U.S. Constitution have been introduced multiple times throughout American history, none have ever succeeded in becoming law.
Many economists, especially those belonging to the Keynesian school, view balanced-budget amendments with a degree of wariness. While they admit that a large, long-term deficit is harmful to the economy, they also believe that deficit spending is beneficial during economic recessions.
In a survey conducted in 2003, the American Economic Association determined that 90 percent of its members believed that, if the federal budget were to be balanced, it should be done over the course of the business cycle rather than on an annual basis.
In the Senate, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) continue to work on separate debt ceiling plans that gives the president more authority to raise the debt ceiling, while also forcing the White House to concede to spending cuts.
The White House formally threatened to veto the measure, which House Republicans plan to bring to the floor on Tuesday.
The bill—sponsored by Rep. Jason Chaffetz (R-Utah) and known as the “Cut, Cap, and Balance Act of 2011” (H.R. 2560)—would cut fiscal year 2012 federal government expenditures by $111 billion.
The bill proposes to achieve this through reducing non-security discretionary spending by $76 billion, and cutting non-veteran-, non-Social Security-, and non-Medicare-related mandatory spending by $35 billion.
In terms of capping federal spending, the bill would implement a series of gradually decreasing federal spending caps, starting with 22.5 percent of GDP for fiscal year 2012 and eventually achieving a final goal of 19.9 percent of GDP by the year 2021.
Perhaps most importantly, it also proposes a balanced-budget amendment to the Constitution that would have to pass a two-thirds House vote before being submitted to the states for ratification.
The bill has particularly garnered much support from the Tea Party wing of Republican congressmen. In an interview on the C-SPAN Sunday talk show “Newsmakers,” Rep. Jim Jordan (R-Ohio) voiced his support for the bill, and stated that the measure, if passed, would fundamentally change politics in Washington.
“If we could actually accomplish that, that would truly, fundamentally change the way we do things in Washington, and change the country in the right way, and help us get our fiscal house in order, and put us, frankly, on a fiscal path that’s actually sustainable,” said Jordan, chairman of the Republican Study Committee caucus.
In a Statement of Administration Policy released by the Office of Management and Budget, President Barack Obama denounced the measure, describing it as unnecessary and unrealistic.
“Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility,” said the president. “Increasing the federal debt limit, which is needed to avoid a federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions.”
The president also voiced concern over the effect that the bill’s proposed cuts to the entitlement programs of Medicare and Social Security would have on the country’s most vulnerable and needy citizens.
Despite all the rhetorical pugilism surrounding the Cut, Cap, and Balance Act of 2011, it is unlikely that the bill will pass into law, given the Democratic majority in the Senate.
Although balanced-budget amendments for the U.S. Constitution have been introduced multiple times throughout American history, none have ever succeeded in becoming law.
Many economists, especially those belonging to the Keynesian school, view balanced-budget amendments with a degree of wariness. While they admit that a large, long-term deficit is harmful to the economy, they also believe that deficit spending is beneficial during economic recessions.
In a survey conducted in 2003, the American Economic Association determined that 90 percent of its members believed that, if the federal budget were to be balanced, it should be done over the course of the business cycle rather than on an annual basis.
In the Senate, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) continue to work on separate debt ceiling plans that gives the president more authority to raise the debt ceiling, while also forcing the White House to concede to spending cuts.
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