Congress is at a pivotal crossroad. The chairmen of the House and Senate Budget panels are preparing to unveil their plans for the nation’s budget this week; at stake are the $1.79 trillion dollars in savings scheduled through 2021.
On the one hand, there are the members of Congress who would like to get rid of the sequester caps on military spending; on the other are the legislators who wish to maintain the 2011 Budget Control Act (BCA) intact.
It looks like the Republican leadership will opt to preserve the budgetary restraint and save the American taxpayer trillions of dollars in the near future. Yes, that is correct, trillions. It all has to do with the stunning flat-line which the Sequester imposes on discretionary spending.
As a way to keep the folks on The Hill accountable for spending, the BCA placed hard caps on the amount of money that could be allocated for certain budgetary items. These were to come into place if lawmakers were unable to come to an agreement over a way to reduce federal deficits. Unfortunately (or fortunately, if you are content with the Sequester), lawmakers failed to do so and the result was a sudden reduction in discretionary spending for the ten years following the BCA’s passage in 2011.
CBO projections reveal the effectiveness of the Sequester in halting spending:
(Source: Congressional Budget Office)
Over time, discretionary spending was projected to continue rising in perpetuity; but thanks to the BCA, discretionary spending was brought under control.
That is one third of the national budget stabilized with no tax hikes needed. What is even more miraculous is that all of this was achieved while Republicans controlled only one chamber in Congress.
This key victory has already saved taxpayers $670 billion, but according to CBO projections an additional $1.79 trillion dollars in savings is set to occur through 2021. In other words, the best of the benefits is yet to come.
At the current trend line, the United States is slated to spend a record low amount on discretionary spending as a percentage of GDP at 5.5 percent by 2021. Overall this must be considered the seminal achievement of the conservative movement of the last five years. This gives our national finances breathing room for legislators to look for further reforms down the line.
Should Congress turn away from the Budget Control Act, they would trade $1.79 trillion dollars over the next five years for a couple billion dollars now. Let us hope that Congress has better math sense than to allow for that to happen.