Mechs congress could use to control spending

(Romina, director of budget and entitlement policy at the Cato Institute, where she specializes in federal spending, budget process, economic implications of rising debt, and Social Security and Medicare reform. Boccia was previously director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, “Cut Spending to Stabilize Debt: A Debt Limit Plan for the New Congress,” pg online @ https://www.cato.org/blog/cut-spending-stabilize-debt-debt-limit-plan-new-congress //um-ef)

Here are some commonsense benchmarks Congress should adopt before increasing the debt limit in 2023:

Adopt a credible fiscal plan that will control spending and debt growth, freezing debt as a percentage of GDP at a minimum, or better yet, aiming for primary budget balance (excluding interest costs) before the end of the decade.

Establish a bipartisan commission to reform major entitlement programs, especially Social Security and Medicare, including fast‐​tracking the commissions’ recommendations in Congress.

Reduce and cap discretionary spending, returning discretionary spending to pre‐​pandemic (FY 2019) levels and limiting the growth of new budget caps to no more than 2 percent annually.

Restore the earmark ban.

One more thing: in the event of a recession, Congress should avoid new stimulus spending. Fiscal stimulus in the form of new cash payments or enhanced unemployment benefits would represent the same demand‐​boosting subsidies the federal government pursued during the COVID-19 pandemic that contributed to record‐​high inflation. So, that would not be helpful.

Also, government spending today entails future costs from the likely displacement of higher‐​value private economic activity toward government‐​directed projects, a misallocation of capital, greater debt, reduced incentives to work and invest, and the prospect of higher future taxes that tamper investment. Any relief should thus focus on eliminating regulatory barriers to investing and hiring and relying on existing automatic stabilizers which will kick in without lawmakers pushing new emergency spending. This will enable the private sector to emerge from recession without additional deficit spending that would likely do more harm than it would help.