August 3, 2011

WHERE HAVE YOU GONE WARREN RUDMAN?:

Make the Dollar-for-Dollar Rule Permanent: Matching debt increases with spending cuts will balance the budget in a decade without raising taxes. (ROB PORTMAN, 8/02/11, WSJ)

With this latest debt-limit increase, Congress--at the wise suggestion of House Speaker John Boehner--adopted a new standard: that the bill raising the debt limit must also cut an equal amount of spending over the following decade. In this instance, rather than accede to President Obama's demand as recently as this spring for a "clean" debt-limit increase, Congress matched a $2.4 trillion increase with at least $2.4 trillion in spending savings over the decade.

My hope is that Congress and the president will make further structural spending reforms to respond to the fiscal crisis. But at a minimum, lawmakers should commit to making the "dollar-for-dollar" rule a permanent debt-limit policy. Using Congressional Budget Office data, I have calculated that if we apply this every time we reach the debt limit over the next 10 years, we will balance the budget by 2021 without raising tax rates over current rates.

That's more than $5 trillion in spending cuts over the decade. And because many of these spending reforms would necessarily carry over past 2021, the savings in the following decade would be even larger. If this framework were followed, starting in 2021 budget surpluses would end the era of debt-limit increases.


The ease with which it can be done shows how minor the problem is.


Posted by at August 3, 2011 10:06 PM
  

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