The Debt Limit Deal Was a Win for Spending Restraint

Those Who Opposed the Fiscal Responsibility Act Shouldn't Be Taken Seriously

Apologies for the delay in posts. May was an extraordinarily busy month that carried over slightly into June. We just bought a house, so getting the house ready to move into and actually moving and setting up everything has been quite a chore.

A couple of weeks ago, Congress passed the Fiscal Responsibility Act, H.R. 3746, which, among other things, established discretionary spending caps between FY 2024 and FY 2025, set discretionary spending targets between FY 2026 and FY 2029, and suspended the debt limit through the end of 2024. Overall, the Fiscal Responsibility Act would reduce the budget deficit by $1.523 trillion over the next ten years compared to the May 2023 baseline from the Congressional Budget Office (CBO).

Now, the Fiscal Responsibility Act is still essentially a band-aid on a bullet wound because the bill addresses discretionary spending and expands work requirements for the Supplemental Nutritional Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF). House Republicans’ Limit, Save, Grow Act, H.R. 2811, cut discretionary spending much further and in addition to expanded work requirements for SNAP and TANF, the bill expanded work requirements for Medicaid. The total savings over ten years was $4.8 trillion. Clearly, the Limit, Save, Grow Act was the far more impactful piece of legislation, but it was never destined to become law, and everyone knew it.

Even though the Fiscal Responsibility Act is quite a notable accomplishment, as limited as it is, some conservatives wanted more. Part of this push came from outside groups, including former Office of Management and Budget (OMB) Director Russ Vought’s organization, which grifts about “woke spending” and apparently believes that work requirements will solve our long-term fiscal woes without reforming increasingly fiscally unsustainable entitlement programs like Medicare and Social Security.

Vought, of course, oversaw OMB between January 2019 and January 2021, which means he oversaw the production of the ex-president’s budgets. Despite rosy economic growth assumptions in the proposed FY 2020 budget, Vought couldn’t get the budget to balance. Granted, the proposed budget did reduce the deficit, so credit where it’s due, I suppose, but the numbers were phony. By the end of the ten-year budget window in FY 2029, OMB projected a $202 billion budget deficit, or 0.6 percent of gross domestic product (GDP), while the CBO projected a $1.019 trillion budget, or 3.3 percent of GDP. The FY 2021 budget didn’t balance either, but at least OMB was marginally more realistic in its economic growth projections, not that it mattered because of COVID-19.

Of course, a president’s budget doesn’t really matter. It’s just an exercise. The White House submits its budget and both sides use it as fodder. In the end, Congress does its own thing. Still, the ex-president’s record on spending is abysmal, even before we consider the extreme measures taken by Congress and supported by the White House in 2020 to respond to COVID-19.

The debt held by the public on January 20, 2017, the day the ex-president entered the White House, was $14.4 trillion. Three years to the day later, the debt held by the public was $17.178 trillion. The day the ex-president left office, the debt held by the public was $21.636 trillion. Even before COVID-19, we saw a nearly $3 trillion increase in the public debt. Overall, we saw a more than $7 trillion increase in only four years. The ex-president signed two budgets before COVID-19 that increased discretionary spending by $617 billion, and that excludes emergency spending. Despite this absolutely awful record, Vought, by the way, has endorsed his old boss. Yay, fiscal conservatism! (Yes, that’s sarcasm.)

The Fiscal Responsibility Act is only as good as those who will fight for it. No, it’s not enough, but it is something, regardless of what the Conservative Industrial Complex says. Any wins in a deal were always going to be limited. Speaker Kevin McCarthy (R-CA), whose constant defenses of the ex-president annoy the hell out of me, got the best deal he could. Yet, that deal, which, again, reduces the budget deficit by $1.5 trillion isn’t enough for some conservatives. Those who opposed it say that they had an alternative—the Limit, Save, Grow Act—but that wasn’t a real alternative because it wasn’t going to pass. Republicans hold one-half of one branch of the federal government. Their only alternative was default, and that could’ve been a disaster.

It's just hard for me to take those who opposed the Fiscal Responsibility Act seriously. It was a win for spending restraint, albeit a small one. They failed to understand the political realities of divided government. They failed to see the wins that McCarthy got. They failed to see the alternative, which was likely economic turmoil. It’s not about actually fighting spending, though, because if it was, they would’ve pushed for, you know, actual reforms to the programs that are driving deficits and debt. It’s all about the grift, and the donors to and supporters of these members and groups are being fooled.