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Overall Spending Caps Would Dismantle and Defund Programs for Hungry and Poor People

Right now, members of Congress are looking at how to best to reduce the federal government’s long-term deficits. One idea that has re-emerged, despite being rejected in previous budget debates, is creating a cap on all federal spending. This proposal has serious consequences for how the government provides aid to needy families.

An overall spending cap, also known as a global spending cap, would limit the total amount of money the federal government can spend each year. Although it could be implemented in different ways, the most prominent plan for a cap by Senators Bob Corker (R-TN) and Claire McCaskill (D-MO) would restrict spending to 20.6 percent of Gross Domestic Product (GDP). This cap, while representing a 40-year average in spending, does not reflect a federal government with greater responsibilities nor the costs of rising health care and retiring baby boomers. Today, spending is closer to 25 percent of GDP, meaning that hundreds of billions of dollars would have to be cut to reach the Corker -McCaskill target. As we’ve seen from recent attempts to cut spending, those cuts would disproportionally come from low-income programs.

Undoubtedly, the country faces difficult fiscal decisions. In the long term, debt is expected to increase to unstable proportions, putting government assistance at risk. Congress must take action to reduce future deficits. Yet the economy is still recovering, and many who can’t find work rely on government programs to put food on the table and pay healthcare expenses. It’s important to recognize that not only do caps do nothing to energize the economy, they also put struggling families at further risk by cutting critical programs.

These caps also do nothing to address the true drivers of our deficits. As shown in this graph from the Center on Budget and Policy Priorities, rising healthcare costs and retiring baby boomers are expected to drive up the costs of Medicaid and Medicare in the future. Interest payments on debt borrowed to pay for the wars, tax cuts, and recession are also expected to grow. A spending cap would not fix these structural problems but instead force even deeper cuts to other programs to make room for the increasing costs.

Global-spending-caps
While proposals for overall caps have not yet cited specific changes to spending, you can look to Budget Committee Chairman Paul Ryan’s plan to see the kinds of deep cuts needed to meet those targets. That plan attempts to balance the budget on programs such as the Supplemental Nutrition Assistance Program (SNAP), which does not contribute to increasing deficits as discussed in Institute Notes, and by cutting international and domestic poverty programs by at least a third. And like the Ryan plan, using tax revenues for deficit reduction is not an option under a spending cap that only counts the dollars that would be cut from the budget.

During a recession, GDP naturally falls as jobs are lost and consumers buy less. As we saw in the last few years, the only sector that can spend and counteract this trend is the government. Spending on SNAP, for example, is designed to, and did, automatically increase with need. But if an overall spending cap is enacted, the government would lose its ability to respond to rising needs during economic downturns and even natural disasters. In fact, because GDP shrinks, the government would actually have to make cuts.

Along with other Christian leaders, Bread for the World recently asked Congress to form a circle of protection around programs for poor and hungry people. Instead of focusing on enacting spending caps that harm these families, we must look to Congress to take responsible action on deficits with a holistic whole-of-budget approach that also includes revenue increases and that ensures the budget is not balanced on our most vulnerable populations.

For more information on how budget negotiations could affect hungry and poor people, please visit our budget page.

Ben D'Avanzo is Mimi Meehan fellow at Bread for the World.

 

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Comments

There is no question that our long-term debt is a problem that needs to be addressed. But this is the wrong way to do it. We need a balanced approach to our fiscal issues, not proposals that abandon the middle class and working families. A global spending cap is not an answer to our fiscal woes. It does nothing to solve the problems of rising health care costs, unemployment, or income inequality.

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