Senator Rand Paul (R-Ky.) recently introduced two pieces of legislation that will help the nation get its finances back in order. S.2182, the “Cut, Cap, and Balance Act of 2015,” will implement strong reforms to cut spending and ensure a balanced budget, while S.2181, the “Default Prevention Act,” prioritizes spending in the event the debt limit is reached to protect the nation from default. ATR endorses these important pieces of legislation and urges all Senators to vote for and support these bills.
Together, these two pieces of legislation will protect the nation from default, while charting a pathway toward fiscal responsibility.
The Cut, Cap, and Balance Act address three important areas. First, the legislation cuts the deficit in half in year one by enacting spending limits across the board with the exceptions of Social Security, Medicare, military pay, veterans’ benefits, and interest. These cuts will result in $207 billion in savings this year.
Second, this legislation introduces a future cap on spending set at 18 percent of GDP, following a five-year glide path toward this level.
Third, this legislation introduces a Balanced Budget Amendment (BBA) that requires the federal government to live within its means. It also prevents an increase in the debt limit until Congress passes a BBA and sends it to the states for ratification.
The Default Prevention Act ensures the US will not default on its obligations by prioritizing spending in the event the debt limit is reached. If this occurs debt service, military pay, Social Security, and Medicare payments are given priority over all other spending. The average monthly spending on these four expenditures is $158 billion per month, meaning there is ample funding amongst the average monthly revenue of $271 billion to pay for these priorities.
Together, the Cut, Cap, and Balance Act and the Default Prevention Act will protect the nation from defaulting on its obligations in the event the debt ceiling is increased while setting the nation on a pathway toward fiscal responsibility and balanced budgets. ATR endorses these two important pieces of legislation and urges all Senators to support these bills.