There were three times in the last 40 years when controls were imposed on how much Congress can spend each year.
The first time was the Gramm-Rudman-Hollings budget caps and sequesters in 1986. The second was the Clinton-Gingrich budget deal in 1995-96, and the third was the underrated Budget Control Act negotiated by then-Speaker John Boehner and Barack Obama, which instituted hard “pay-as-you-go” caps on domestic and defense spending.
All three times spending fell as a share of GDP, and so did the deficit. After the Clinton-Gingrich negotiations, we had one of the largest reductions in spending and the only balanced budgets – with almost $500 billion in surpluses – in half a century. The economy and stock market boomed.
Each time when the budget caps were repealed, spending and red ink soared – including when the Republicans idiotically blew off hard spending caps in 201,1 so they could spend more money on the Pentagon.
Spending caps have held federal outlays to 2.7% growth when in effect. Without spending caps, we’ve had 6.4% growth, according to a new Brookings Institute study.
So, duh, we need “pay as you go” spending caps. Start right now. If Republicans want $200 billion more for defense, include across the board 5 to 10% cuts to all other programs to pay for it. The GOP’s own studies show there is more than $1 trillion waste fraud, abuse, and outright theft.
If the GOP won’t even do this, then we have not one, but two big spending parties in Washington.
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