Fiscal Follies

Some people have ideas about how to change things in Washington. And some people like to give the appearance of having ideas about how to change things in Washington. For example, Reps. Mike Pence and Jeb Hensarling in Wednesday's Wall Street Journal laid out a plan for recapturing the political and moral high ground on spending and, by the way, saving the nation from impending fiscal collapse. Don't raise taxes. Simply enact a Constitutional amendment. "This amendment would limit spending to one-fifth of the economy (our historical spending average since World War II). The limit could only be waived by a declaration of war or by a two-thirds congressional vote." If spending were to come in at a level of 21 percent of GDP in a particular fiscal year, the Constitution would require Congress to reduce spending by 1 percent of GDP—about $150 billion or so based on 2009's figure.

It sounds like a great idea. But Bruce Bartlett, the former Reagan Treasury official who was driven to something resembling madness by his ex-party mates' fiscal lunacy, fillets the proposal on his blog. The gross-domestic-product figures are continually being revised, and fluctuate from quarter to quarter. So, at any given moment, it would be difficult to get a precise measurement of what 20 percent of GDP is. And if there's a year in which the economy unexpectedly shrinks by a few percentage points (as happened in 2009) Congress would be required to go back and hack at spending it had already approved—in the midst of a recession.

But here's what really make this a howler. Such an amendment would have real-world consequences. Congress would have to figure out which programs to cut, and which to preserve. And yet the congressmen who are proposing this amendment won't give any suggestions as to which programs and spending they'd actually cut. Consider: in 2009, when, Pence and Hensarling write, government spending was 24.4 percent of GDP, GDP came to about $14.3 trillion (see table 3 in this release). To get under the 20 percent limit, Congress would thus have been required to cut $629 billion in spending. That's a lot. Especially when you consider that most federal government spending is mandatory spending—i.e., Social Security, Medicare, Medicaid, food stamps, etc. In fiscal 2010, discretionary spending on areas other than defense amounts to $553 billion. Cutting $629 billion in spending last year would have required zeroing out every single last dime of nondefense discretionary spending and then cutting tens of billions of dollars from defense or entitlements.

I e-mailed Mary Vought, press secretary of the House Republican Conference, to see if Reps. Pence and Hensarling had any specific ideas of what to cut. The answer: not really. "That's not what the Spending Limit Amendment is about," she e-mailed back. The congressmen do have ideas to reform spending, but the real issue is to focus on the process. "Talking about savings in the budget before we have even decided how much the savings need to be is putting the cart before the horse."

Fair enough. But like all the fake deficit hawks out there, Pence and Hensarling are willing to shout loudly about the need to change spending habits but go mute when asked for specifics. It's very difficult to take a proposal like this seriously unless its sponsors are willing to tell us how it would work in practice. An across-the-board spending cut? Across-the-board cuts in everything except debt service, defense, and entitlements? It's kind of like a person who consumes 3,000 calories a day saying he's committed to reducing his daily caloric intake to 1,800 calories—but then refusing to list any of the foods from his current diet that he'd eliminate in order to do so.