Why You Can’t Fight a War on an Austerity Budget
Policy + Politics

Why You Can’t Fight a War on an Austerity Budget

Reuters/iStockphoto/The Fiscal Times

Controversy over the sequester and the spending caps it imposed has raged off and on ever since Congress failed to reach agreement on how to best implement $1.5 trillion of long term spending cuts under a 2011 bipartisan budget deal to avert a government shutdown and default on U.S. borrowing.

The automatic spending cuts were designed to be equally imposed between defense and domestic programs as a way of slowing the growth of the nation’s debt over the coming decade and holding defense spending increases to about two percent.

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Congress declared a two -ear hiatus for the spending caps, but they will be back in full force again this fall unless lawmakers decide to act again to blunt or eliminate the cuts.

Sen. Tim Kaine (D-VA) said during an Armed Services Committee hearing earlier this week that Congress and the military must first develop a more effective strategy for meeting threats from abroad and then determine the money needed to cover it,  but that the threat of a renewed sequester is disrupting that process.

From all indications, a consensus is emerging among Republican and Democratic lawmakers that the defense spending caps must be lifted again, according to Bill Hoagland, a former Senate Republican budget expert. However, Hoagland cautioned in an interview today that many Democrats and moderate Republicans will insist that the caps be lifted for domestic programs as well.

The new Senate Budget Committee chair, Sen. Mike Enzi (R-WY), and House Budget Committee chair Tom Price (R-GA) have both said they are committed to drafting a blueprint that would eliminate the deficit within a decade without raising taxes. How Congress could achieve that goal without preserving tight caps on defense and domestic programs is something of a mystery.

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“I see this setting up as a big set of negotiations around the appropriations levels for 2016 and beyond, and I just don’t know how it’s going to turn out,” said Hoagland, a senior official with the Bipartisan Policy Center. “There are going to be some cross currents going on. We’ve got to balance the budget at the same time we can’t raise taxes. It’s going to complicate the goal of reaching a balanced budget in ten years.


Even as President Obama seeks to exceed the $500 billion defense spending limit for next year mandated by the Budget Control Act of 2011, the administration has proposed other savings that would cut 3,500 civilian positions within the Pentagon’s headquarters staff.

With the economy making a comeback and successful efforts in recent years to restrain the growth of government spending, the budget deficit this year and next will be at its lowest levels since 2007, or roughly $468 billion a year. 

However, a new study by the non-partisan Congressional Budget Office shows that the deficit will begin to climb again, as more and more baby boomers retire and government entitlement programs and health care spending begin to skyrocket.

The latest CBO projection shows the deficit climbing from $540 billion in 2015 to $948 billion in 2022 – and to more than $1 trillion in 2025. The cumulative deficits over the 2016-to-2025 period would total $7.6 trillion. Spending would surge from roughly 20 percent of GDP this year to about 22 percent in 2025. 

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