In the Joint Committee on Deficit Reduction's first open hearing in more than a month, Democrats and Republicans revealed their divisions over how and where to make discretionary spending cuts in a deficit reduction package the group must produce before Thanksgiving.
"Nondefense discretionary spending represents less than one-fifth of total federal spending. Listening to the debates here in D.C. over the last few months, you would think this small piece of pie was a whole lot bigger," Co-Chairman Patty Murray (D-Wash.) said in her opening statements, careful to differentiate between defense and domestic discretionary spending.
"All the focus on this one area is especially striking given that we are spending about the same on nondefense discretionary programs in 2011 as we did in 2001. Meanwhile, mandatory programs increased, defense spending increased, and revenues plummeted," she said.
Republicans, meanwhile, were not as deliberate throughout the hearing to draw a distinction between the two kinds of discretionary spending. Instead, they attacked the 2009 stimulus bill as an unnecessary increase in spending that they believe added to the ballooning deficit.
Lawmakers from both sides of the aisle posed tough questions to Congressional Budget Office Director Doug Elmendorf, whose appearance before the committee Tuesday was his second since the panel began meeting.
Elmendorf gave a detailed outline of where budget outlays have been and where the nonpartisan budget office predicts they will go, all the while underscoring that discretionary spending is not only a smaller piece of the federal budget than mandatory spending — like for Medicare, Medicaid and Social Security — but also is growing at a much slower rate.
Indeed, this seems to be the one point where Democrats and Republicans agree. Super committee members from the left and right emphasized that cutting discretionary spending is not enough to seriously rein in the federal deficit. Any package that would put a serious dent in deficits must include reforms in revenues and mandatory spending programs, the CBO chief said.
The GOP co-chairman of the panel, Rep. Jeb Hensarling (Texas), highlighted this point in his opening statements, which were later cited by Elmendorf in an answer to a question from Murray.
"Prudent stewardship of our discretionary budget is going to be helpful. It alone cannot solve the crisis," Hensarling said. "The challenge before us remains that we must find quality health care solutions, quality retirement security solutions for our nation at a cost that does not compromise our national security, does not compromise job growth in our economy and does not mortgage our children's future. Everything else we do, including dealing with the discretionary budget, will be helpful. Nothing else will solve the structural debt crisis or allow this committee to meet its statutory duty."
Despite hints from Democrats that defense spending is just as much a potential problem as other discretionary programs, Republicans — especially Senate Minority Whip Jon Kyl (Ariz.), a member of the super committee — have bristled at the idea of slashing more funds from the Department of Defense. The issue is of particular note because if the super committee fails, mandatory across-the-board spending cuts, including about $500 billion from security-based discretionary spending, will be enacted over the next decade.
Republicans explored the possibility of Congress repealing the defense part of the mandatory cuts, while Democrats elicited agreement from Elmendorf that doing so might worsen the nation's budget outlook.
Kyl today also asked questions about how the president's recent announcement of a more immediate drawdown in Iraq might affect the budget office's baseline calculations. He appeared to be trying to make a point that including the withdrawal from Iraq as budget savings would be a gimmick that could backfire on the panel.
"This news from the administration is a factor that will presumably affect the funding they request and the funding Congress enacts but not necessarily in a one-to-one way that we could analyze," Elmendorf said. According to Elmendorf, discretionary spending accounts for 40 percent of the government's budgetary outlays, but half of that is for defense programs. The CBO chief noted that in the long run, continuing to cut into nondefense spending would have real "human costs."
"Over time, cuts in discretionary spending reduce, in general, the services that the American public receives — services in protection against foreign enemies, services in the highways they can use or the national parks they can visit or other sorts of programs," Elmendorf said in response to a question from Murray. "Those cutbacks have a variety of human costs. They can also have economic costs, depending on the nature of the cutback."
Though entitlement reform and taxes weigh heavily on the 12-member bipartisan, bicameral panel, lawmakers stuck pretty closely to the hearing's stated task of discussing discretionary outlays.
The public hearing came just a day after Democrats made a presentation to the full super committee outlining their first potential offering of a deficit reduction plan — a presentation Roll Call first reported about Tuesday night. Sources confirmed today that the package presented would implement $2.5 trillion to $3 trillion in cuts during the next decade. It would include tax increases that would nearly equal spending cuts.
The other issue plaguing the committee is what budget assumptions to make in order to score whatever proposal it generates. Where the panel starts and what it can assume in automatic savings — from the expiration of the Bush-era tax cuts extended by President Barack Obama or from a drawdown in troops abroad, for example — could dictate how much it needs to cut.
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