Democrats Oppose Spending Cap Plan
Wednesday, May 11, 2011
Democrats Oppose Spending Cap Plan
By JANET HOOK and CAROL E. LEE, The Wall Street Journal
The White House and Senate Democratic leaders, worried that a
proposal to cap federal spending could gain traction in Congress,
have mounted a drive to discredit the idea.
The proposal would limit federal spending-for everything from
Medicare and other entitlements to discretionary items like
military, education and foreign aid programs-to 20.6% of the
nation's gross domestic product, when the cap is fully phased in.
If Congress did not comply, the cap would be enforced with
across-the-board spending cuts.
Spending in the current fiscal year ending Sept. 30 is projected
to be 24.3% of GDP, the highest since World War II, according to
the Congressional Budget Office.
The bill's lead sponsor is a Republican, Sen. Bob Corker of
Tennessee. But two Democratic senators have signed on, and party
leaders worry that more could join-especially senators facing tough
re-election challenges in swing states who are looking for ways to
burnish their credentials as deficit-cutters.
Proponents say that only the threat of large, across-the-board
cuts will push Congress to make tough long-term choices.
"This bill isn't just about cutting back this year or next year.
It's about instilling permanent discipline to keep spending at a
responsible level," said Sen. Claire McCaskill of Missouri, the
leading Democratic sponsor, when she introduced the bill with Mr.
Corker earlier this year.
But Democratic leaders argue that while the cap may be appealing
and easy to explain to voters, it sets a ceiling so low that it
would force changes in Medicare and other programs as drastic as
those called for by House Republicans, which Democrats have roundly
rejected.
Senate Majority Leader Harry Reid (D., Nev.) said Tuesday that
tax increases may be needed, along with spending cuts, to help rein
in the deficit. "We shouldn't be drawing lines in the sand. The
fair way to do that is to cut spending…and also to make the tax
code a little more fair," said Mr. Reid, who has warned his
colleagues against supporting the spending cap proposal.
Sen. Jay Rockefeller (D., W.Va.) also attacked the spending cap
concept because of its potential impact on Medicaid, the
federal-state health-care program for the poor.
In the latest effort to undercut the proposal, White House
budget director Jacob Lew on Tuesday argued against it as part of a
budget presentation to Senate Democrats, according to one
participant in the meeting. An administration official confirmed:
"We've been talking to senators about it, and we have
concerns."
The liberal group MoveOn.org has emailed its members attacking
Ms. McCaskill and on Monday released a letter from 75 economists
attacking the bill.
The spending cap is one of many ideas circulating on Capitol
Hill at a time of Democratic uncertainty about what strategy to
adopt in deficit-reduction talks. Democrats are unified in their
opposition to the
House GOP's proposed budget and deficit-cutting plans, but they
have not yet rallied around a fiscal plan of their own.
Many Democrats have been waiting to see the plan being prepared
by the so-called Gang of Six, a bipartisan group of senators. If
those talks collapse, some fear Democrats will look to embrace
another deficit-cutting plan.
Mr. Corker wants the spending cap legislation to be approved as
a condition of passing an increase in the federal debt limit in
coming weeks.
In addition to Ms. McCaskill, the bill has two co-sponsors from
the Democratic caucus- Sens. Joe Manchin of West Virginia, who like
Ms. McCaskill faces a tough 2012 re-election fight, and Joe
Lieberman, the Connecticut independent.
Separately, lawmakers held another meeting at the White House in
an effort to reach a debt-cutting agreement. "I remain optimistic,"
Vice President Joseph Biden, who is leading the talks, said
afterward. "Whether we get to the finish line with this group is
another question."
House Majority Leader Eric Cantor (R., Va.) said before the
session that the talks were focused on "where are we in terms of
commonality right now." The two sides are sharply at odds on tax
increases, which Republicans reject, and overhauling Medicare,
which Democrats oppose, but both see room for agreement on spending
cuts.
Mr. Cantor rejected the notion of relying too heavily on
budgetary caps for future years, which are favored by President
Barack Obama and some lawmakers of both parties. "When this
Congress tries to impose discipline on itself for future years,
inevitably those restrictions are lifted and waived, and we're not
interested in playing that kind of game," Mr. Cantor said.
-Naftali Bendavid and Siobhan Hughes contributed to this
article.