U.S. Senator Bob Corker, R-Tenn., has offered a bipartisan amendment to the tax cut package that would establish a binding federal spending cap tied to the country's economic output, instilling fiscal discipline and smaller government while incentivizing lawmakers to pass pro-growth policies. Senator Claire McCaskill, D-Mo., is the lead Democrat sponsor of the amendment.
"This has been a tough vote for me. I spent a lot of time weighing the pros and cons, but at the end of the day I'm supporting the tax package because the most important short-term issue our country faces is the economy. Allowing these income tax rates to expire would be devastating to our fragile economy," said Corker. "And while this legislation is important for stabilizing the economy and creating certainty for businesses and our citizens, over the long-term nothing is more important than acting quickly to get spending under control and reduce our deficit.
"To that end, Senator McCaskill and I have offered an amendment to cap federal spending as a percentage of GDP, a move that would instill fiscal discipline and smaller government while incentivizing lawmakers to pass pro-growth policies. This bipartisan amendment won't be debated or voted on today, but hopefully it and other efforts will lay down a marker and build momentum in the new Congress for tangible, meaningful action to get government spending under control prior to a vote on the debt ceiling."
In 2009 the federal government spent $1.4 trillion more than it took in, borrowing nearly 40 cents of every dollar. By 2030, on the current trajectory, U.S. debt will reach 146 percent of GDP, far exceeding what economists of every persuasion deem as sustainable. Over the past 40 years, federal spending has averaged 20.6 percent of GDP, and revenue has averaged 18 percent. Today, spending is 23.8 percent of GDP, and revenue is 14.9 percent of GDP.
The Corker-McCaskill amendment would limit all federal spending to a percentage of GDP. Specifically, the amendment would:
- Eliminate the "off-budget" distinction for certain programs, allowing for a complete and accurate assessment of federal outlays and future obligations, and
- Put in place a 10-year glide path to bring spending down to the historical average, 20.6 percent of GDP.
Should Congress violate the binding cap, the House and Senate would have 45 days to offset the increase in spending. Failure to offset the spending increase would trigger corresponding, simultaneous cuts throughout the federal budget. In an emergency, as defined in the statute and determined by a two-thirds vote in both bodies, Congress could authorize -- and be held accountable by voting for -- spending in excess of the cap for that year.
The Corker-McCaskill amendment is cosponsored by Senators Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.), Saxby Chambliss (R-Ga.), John Cornyn (R-Texas), Johnny Isakson (R-Ga.), George LeMieux (R-Fla.) and John McCain (R-Ariz.).
"We face many challenges as a country, but after four years in Washington and a lifetime in business, I believe unsustainable spending habits and fiscal insolvency pose the greatest threat to our economic stability, freedom, way of life and future as a nation," said Corker. "We are in real danger of becoming the first generation of Americans to leave our country in worse shape than we found it. The time to act is now."