By Joseph J. Schatz

Binding caps on federal spending, last used during deficit reduction efforts in the 1990s, could prove pivotal as lawmakers search for possible fiscal compromises in advance of a summer battle over increasing the ceiling on the national debt.

With the government approaching a default on its debts by early July, according to the Treasury Department, conservatives and some Democratic moderates are insisting that a package of debt reduction measures will have to accompany any increase on the legal borrowing limit.

Putting in place a wide-ranging fiscal agreement on spending — or an overhaul of the tax code — that could win bipartisan support in that timeframe would be next to impossible.

That reality has allowed a group of senators advocating statutory caps on federal spending to position themselves as dealmakers.

Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., who introduced legislation (S 245) earlier this year to put legal limits on all discretionary and mandatory spending, held a news conference Thursday with three new cosponsors — Joseph I. Lieberman, I-Conn., Ron Johnson, R-Wis., and Minority Whip Jon Kyl, R-Ariz.

They characterized their proposal as the one most likely to gain bipartisan support in time for a debt limit vote before early July. Treasury Secretary Timothy F. Geithner says his department will run out of ways to avoid a government default by then, at which point Congress would need to act to avoid a crisis that could send financial markets into a tailspin.

The proposal “can move through the process that quickly,” Lieberman said, adding that it would set a concrete deficit reduction goal while leaving Congress time to determine the fiscal policies to achieve that goal.

The Corker-McCaskill proposal would cap federal spending starting in fiscal 2013. Total outlays — including all discretionary and mandatory spending — would be gradually trimmed each fiscal year over the next 10 years, until federal expenditures fall to less than 21 percent of gross domestic product, compared with nearly 25 percent now.

Unlike other plans being talked about, the proposal would not exempt politically sensitive items such as Social Security, Medicare and defense spending.

That’s one way in which it differs from President Obama’s plan, announced April 13, which calls for tax increases on the wealthy and a “trigger” mechanism that would reduce spending and tax expenditures, except on Medicare and Social Security, if debt targets were not met in 2014.

The House is preparing to vote Friday on a GOP-written fiscal 2012 budget resolution (H Con Res 34) that calls for a major restructuring of Medicare and Medicaid, as well as deep cuts in discretionary spending, over the next 10 years.

“Neither of them has adequate support to be enacted,” Lieberman said. “That’s where the legislation that we’re introducing comes in.”

If the caps in the bill were not met, the White House Office of Management and Budget would be required to make cuts in federal spending — and only a two-thirds vote of the House and Senate could override those cuts.

The Corker-McCaskill effort comes as a separate group of senators — known as the “Gang of Six” — privately negotiates a broader set of debt reduction measures, including an overhaul of the tax code, based on the recommendations issued last December by the president’s debt commission.

That group, which includes Michael D. Crapo, R-Idaho, Kent Conrad, D-N.D., Tom Coburn, R-Okla., Majority Whip Richard J. Durbin, D-Ill., Mark Warner, D-Va., and Saxby Chambliss, R-Ga., has yet to release its plan.

McCaskill said she would be happy to make the spending cap proposal part of the Gang of Six effort. Corker demurred on that point, with a smile, though he said he is “pulling for” all deficit reduction efforts.

Indeed, both the Corker-McCaskill plan and the Gang of Six effort would face likely obstacles from elements in both parties. Conservative Republicans are wary of any tax increases, even as part of a larger tax code overhaul envisioned by the debt commission. Liberal Democrats are opposed to any significant changes to Social Security, in particular.

Because the Corker-McCaskill plan does not address how to achieve the spending caps, all sides may see it as more feasible politically — at least for the moment.

Acknowledging the concerns of many in her caucus, McCaskill said that “sometimes in my caucus it’s important to plant the flag and hope you can draw people toward the flag.”

Michael Brumas, a spokesman for Minority Leader Mitch McConnell, R-Ky., said only that McConnell has not addressed the Corker-McCaskill proposal publicly and pointed to the GOP leader’s remarks earlier this week: “There is bipartisan opposition in the Senate to raising the debt ceiling unless we do something significant about the debt,” McConnell said.

Mandatory deficit reduction targets were put in place in 1985; in subsequent laws and budget deals, caps were instead tied to tax and spending levels, before expiring more than a decade ago.

Conservatives say binding spending caps are not enough, particularly since Congress sometimes voted to weaken previous caps before automatic cuts kicked in.

“Every statutory cap we’ve ever had has been broken,” Rand Paul, R-Ky., argued April 12, pointing in particular to the pay-as-you-go law in the late 1990s.

Paul said a constitutional requirement is needed to force Congress to cut spending.

“Without a rule or a mandate from the Constitution, we will never balance the budget,” he said. “We will never get our spending under control unless we have an ironclad rule that we cannot evade.”

View Original Article