Many issues featured prominently in the November elections but none more so than federal spending and the country’s budgetary crisis. In the current fiscal year, the United States is running a deficit of $1.3 trillion. The long-term, cumulative debt is an astounding $14 trillion, with projections of nearly $17 trillion by 2015. Leaders of both parties have rightly described these trends as unsustainable, and as a result there will likely be sizeable reductions in federal discretionary spending – including Defense Department spending – as well as measures to reduce the growth of entitlement programs such as Medicare, Medicaid and Social Security.
One year ago, amid concerns over the federal deficits, President Barack Obama created the “National Commission on Fiscal Responsibility and Reform,” a bipartisan, 18-member body charged with finding ways to balance the budget and improve the longer-term fiscal outlook. In December 2010, the Commission issued its report entitled “The Moment of Truth,” which proposed spending cuts of $200 billion in both domestic and defense programs. The Commission’s proposals would reduce the deficit by $4 trillion by 2020 and would reform federal entitlement programs. The Commission also recommended:
- A reduction of the federal civilian work force, a three-year freeze on lawmaker pay, a 15 percent cut in White House and congressional budgets, and elimination of all earmarks;
- A requirement that spending cuts be equally split between security and non-security spending;
- The creation of a “Cut-and-Invest Committee” to identify 2 percent of the discretionary budget that should be cut and propose how to redirect the savings into high-value investments;
- A reduction in the size and number of tax expenditures, including elimination of business tax expenditures;
- A reduction in agriculture subsidies by $10 billion through 2020;
- A gradual increase in the retirement ages for Social Security; and
- A 15-cent per gallon increase in the gas tax to fund the Highway Trust Fund.
Although the Commission’s proposals were not approved, they are likely to form the basis of congressional discussions for years to come.