New Bill Would Place a Yearly Cap on Deficits, Limit How Much Congress Can Spend On Year -to-Year Choices - While Protecting Social Security and Veterans
Announcement Comes On Same Day As Official Introduction of Senate
Washington, DC -Michael Bennet, U.S. Senator for Colorado, today announced new legislation to control the federal budget and limit the annual deficit. The bill, which Bennet introduced in the Senate today, would place a yearly cap on the deficit and limit the amount of money Congress could spend on year-to-year spending choices, while protecting Social Security and Veterans benefits. The announcement comes on the same day as the official introduction of Senate PAYGO legislation with Senator Claire McCaskill.
"Growing our economy for the long-term demands that we get our deficit and debt under control," Bennet said. "We cannot continue passing along an IOU to our kids and grandkids. As we emerge from this economic downturn, Washington needs to make deficit reduction a top priority."
The nation's deficit is at $1.7 trillion this year. According to the Congressional Budget Office, the debt could more than double over the next ten years.
In an effort to take steps to put the country back on a path of fiscal discipline, Bennet today introduced the Deficit Reduction Act of 2009. The bill will likely be referred to the Senate Budget Committee.
The proposal seeks to reduce the federal budget deficit in two significant ways. First, starting in 2011, it creates discretionary spending caps for the next ten years. If Congress exceeds the spending caps, the Office of Management and Budget (OMB) will make uniform spending cuts across the government - called sequestration. Social Security, veterans programs, and other categories of spending would be exempt from the uniform cut. The sequestration mechanism and the exemptions mirror the provisions in statutory PAYGO legislation.
Second, the proposal limits the yearly deficit as a percentage of the gross domestic product. By 2012, the deficit could not exceed 4 percent of the GDP. By 2013, the deficit would be limited to 3% of the GDP. Again, if Congress exceeds the deficit limits or discretionary spending limits, OMB will order a sequestration, exempting Social Security, veterans programs and other categories of spending.
Congress would have the ability to exceed the discretionary spending limits and yearly deficit limits during periods of very low or negative economic growth as determined by the Office of Management and Budget and the Commerce Department. The limits could also be exceeded during national emergencies.
"Washington's fiscal mess was created over many years, and we won't solve the problem overnight. This bill will give Congress and the President a guidepost to make the decisions necessary to get our budget under control. It will set a strong and binding standard for us to act responsibly," Bennet said.