Just a day after a heated closed-door meeting that indicated there’s still a large gap between Democrats and Republicans on entitlement and tax reform, the Joint Select Committee on Deficit Reduction convened for its third public policy hearing on Wednesday morning.
And if the points members made during the two-hour hearing are any indication, the 12-member panel has a long way to go to reach a deal before its Nov. 23 deadline to present a package worth $1.2 trillion in deficit savings over 10 years to Congress.
The hearing was scheduled to be a discussion of discretionary spending, which makes up about 40 percent of the budget. But the members only loosely stuck to those guidelines, instead making partisan points about income distribution, defense spending and savings, tax reform, and economic uncertainty.
Congressional Budget Office Director Douglas Elmendorf, who testified during the group’s first public policy hearing on the drivers of the debt, carefully explained budgetary concepts, warned the committee that its decisions on discretionary spending could be voided by future Congresses, and highlighted the savings already wrung from discretionary outlays. He also noted that mandatory spending “dominates” the federal budget.
The committee’s Democrats and Republicans alike agreed with him – at least in theory. But while Democrats pointed out that mandatory spending reforms would have to be paired with reduced defense spending and additional revenues, Republicans maintained that spending – not revenues – is the problem.
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“Lawmakers have already taken significant steps to constrain discretionary spending,” Elmendorf said, noting that total discretionary funding in 2011 was lower than it had been since 2002 because of cuts already made to the discretionary budget.
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Elmendorf pointed out that about half of discretionary spending goes to defense, with the other half split among a number of government priorities, including education, social services, health-related research, international affairs and policing. He noted that discretionary spending has risen from its share of the economy in 1999, when it constituted 6.2 percent of GDP, primarily because of increased defense spending over the last decade and the stimulus program of 2009. It now makes up about 9 percent of GDP.
The discretionary caps enacted in the Budget Control Act will already reduce budget deficits by $778 billion (not including interest savings) between 2012 and 2021, according to CBO calculations.
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Still, Elmendorf noted, if lawmakers do choose to go down the discretionary route in achieving $1.2 trillion in deficit savings over 10 years, they will need to lower the caps for appropriations as well.
“Without a reduction in the caps,” Elmendorf said, “funding for other discretionary activities would probably fill the gap created by the specific reduction or savings.”
But if the opening statement by co-chair Sen. Patty Murray, D-Wash., was any indication, Democrats on the committee are not keen on making further cuts to the discretionary budget.
Dan Friedman contributed contributed to this article.
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