T Nation

Republicans Release Spending Cut Bill


#1

2.5 Trillion in 10 years.

If immediate measures are not taken, the national debt will soon be equal to the entire U.S. economy. At this moment, American opportunity threatens to be overwhelmed by our debt, and that's a race we can't afford to lose.

This dangerous dynamic has been steadily building up for decades, but Washington worsened the problem in recent years with a spending binge of costly bailouts, massive omnibus bills, and failed stimulus.

As a result, the debt burden has grown to previously unimaginable levels. When Nancy Pelosi became speaker of the House in January 2007, it stood at $8.6 trillion. Today, Americans must shoulder a national debt weighing in at a whopping $14 trillion, and the mountain grows larger every day. By the end of this decade, President Obama's budget projections show the national debt nearly doubling its current size to $26 trillion.

These sobering numbers represent the path to bankruptcy, draconian tax increases, and economic stagnation. We refuse such a fate. Instead, we are offering a step-by-step plan to reduce spending and put the United States on course to renewed financial stability.

Known as the Spending Reduction Act, this bill makes major strides toward resolving the debt crisis by cutting $2.5 trillion of spending between now and 2021. Here's how it works:

In the short term, the Spending Reduction Act makes $125 billion of immediate rescissions, which target money already approved by Congress, by cutting current spending back to 2008 levels and repealing the remaining funds from Obama's failed "stimulus" package.

The largest step toward spending reduction begins with the start of the next fiscal year on Oct. 1. On that day, the bill further cuts non-defense discretionary spending to 2006 levels and implements a hard freeze through 2021.

This alone will save taxpayers $2.3 trillion. A portion of these savings come from reducing the size and cost of the civilian federal work force. Attrition will trim the work force by 15 percent, while salaries will go without automatic pay increases for the next five years.

Our plan's overall reduction specifically targets more than 100 separate budget items and spending reforms, ranging from the elimination of duplicative education programs (saving $1.3 billion annually) to a 50 percent reduction of the federal travel budget (saving $7.5 billion annually).

These specific savings, when combined with additional reforms like ending Fannie Mae and Freddie Mac's taxpayer bailout, total approximately $376 billion over the next decade.

America's debt problem wasn't created overnight, and implementing a complete solution will take both time and perseverance. With a healthy dose of courage from elected leaders, however, we can get America moving on the right track again.

Over the long term, balancing the budget will require lasting private sector job creation and robust reforms to entitlement programs that still operate on outdated demographic assumptions.

After passing the Spending Reduction Act, Congress must work to tear down barriers to job creation and make our safety-net programs sustainable for the 21st century. Only when all Americans have ample opportunity to earn success and build prosperity on their own will we enjoy lasting fiscal and economic stability.

Every component of our plan will undoubtedly raise the ire of one group or another, whether it is labor unions who want more benefits or Angora goat herders who want more subsidies. Such disagreements, while regrettable, inevitably rise when a nation confronts the kind of choices we now face. In fact, they will be a testament that Congress is finally making the tough yet responsible choices needed to maintain America's standing as the greatest nation in history.

Whether Americans realize it or not, we are all running together in a race against time. Unless Washington takes swift action to cut spending, we will chain our children to debt and rob them of opportunity to reach for the American Dream. On its own, passing the Spending Reduction Act will not get us over the finish line -- but we will get a $2.5 trillion head start.

Sen. Jim DeMint, R-SC, is chairman of the Senate Steering Committee. Rep. Jim Jordan, R-OH, chairs the Republican Study Committee (RSC), and Rep. Scott Garrett, R-NJ, leads the RSC's Budget and Spending Taskforce.

Read more at the Washington Examiner: http://washingtonexaminer.com/opinion/op-eds/2011/01/cant-reduce-federal-spending-heres-plan-cut-25-trillion-2021#ixzz1BbQ4UIDo


#2

The best part is it ends us owning Fannie Mae and Freddie Mac. That takes a 3-4 trillon dollar time bomb off the tax payers back.


#3

Who is this debt owed to?


#4

The debt of them is the toxic mortgages, owned by the homeowners. So when it blows up as interest rates rise it won't fall on the taxpayers backs, it will fall on the banks and the homeowners.

Seems like the republicans are getting ready to set up a 1920, which is what they should have done in the beginning.


#5

Sorry, I meant the national debt.


#6

China
Japan
UK
etc


#7

Ok, but don't those countries have a national debt as well?


#8

Doesn't matter. We owe them money.


#9

What I'm getting at is, how can someone in debt lend money that they don't have?


#10

Largest holders of U.S. debt ranked:
(amounts are approximate)

  1. The Federal Reserve - 5.5 Trillion (this is probably a lot higher, but this was the most current amount I could dig up.)

  2. Private investors (estates, corporations, private brokers, trusts, etc..) - 1.5 Trillion

  3. China - 1 Trillion

  4. Japan - 1 Trillion

  5. U.S. Pension funds (both private and government) - 800 Billion

  6. Mutual funds - 700 Billion

The rest are state and local governments, Insurance companies, the U.K., U.S. banks, oil exporting countries, and Canada!)


#11

I am pretty sure China is not in debt.

You can owe your mortgage and still have cash in your pocket to lend.


#12

Well....the US lent countries money for years all while owning their own national debt. I don't know how it works but it doesn't seem like those loans ever get returned. Interest may be paid but I doubt the principal is ever paid.


#13

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2079rank.html
I think this represents national debt. China rank #22 $406B

If you lost your job, then you're SOOL, and you could have used that money you lent out.
I don't think it would be considered responsible, when you have say a maxed out credit card, and you're lending money to your friends that should be paying off your credit card.

Is what I'm saying make sense or am I missing some things?


#14

If true, then that's exactly the problem, an individual would never ever go on like this, but countries are allowed to? I don't think any one in their right mind would get a mortgage and never want to pay off the principal.


#15

Yeah, how will the United States ever be able to retire if it doesn't pay off its mortgage in thirty years? And what will the children inherit when it dies of old age? Maybe the USA needs to take on a part time job, or cut back on pedicures and lattes to make ends meet.

In other words, national economies are significantly different than household ones. Nation states do not have short, relatively fixed working lifespans in which to earn income before retiring to a life of leisure and eventual decline. Households cannot expand their income base through immigration. Neither do households have the option of controlling the value of the currency they use to buy and sell things and pay their debts as nation states do.

In other words, "common sense" analogies between household economies and national economies make no sense.


#16

I don't know, maybe I'm wrong but to me fiscal responsibility = fiscal responsibility, however grand the scale is. I'm not an economist but I don't think it's possible to manipulate your currency to get out of 14 trillions owed.
Just as children get to inherit their parents (mis)fortunes, so do future generations get to inherit the country they're born into. From the debt totals provided in the CIA factbook link it doesn't appear that any countries cares about paying off their national debt.
Sorry to get all conspiracy theory, but I remember reading about JFK saying that he wanted to pay off the national debt, which in turn, would take away relatively free money away from certain bankers.
Here's a link about it, I don't know how reliable/verifiable the information is, so if you know more to back it up or refute it, I'm open to that.
http://www.rense.com/general76/jfkvs.htm


#17

End the Fed and most of the debt goes away. I think you have just given me a better way to argue my point thanks.


#18

Will never happen. I wish it would, but I can't see enough people pulling their heads outta their ass's to accomplish it.


#19

The fed reserve and organizations like it are imo the same as mafia. They get what they want and do whatever they have to do to achieve their goal. Rules don't apply to them. The fed is unconstitutional, yet runs the world basically. This is why I feel no guilt about breaking laws.


#20

It seems to me, that if the Fed is privately owned and collects interest on 'money' printed, that it is (1) impoverishing a country, and (2) getting money for nothing that they don't deserve, ie stealing.