Cut, Cap, and Balance

Summary

Cap, Cut, and Balance was an attempt by Congressional Republicans to address spending and debt concerns that were prominent in the 2010 elections. The bill is divided into three parts as it's name implies: cutting the level of spending, capping it at certain levels in the future, and attempting to pass a balanced budget amendment to the constitution.

The plan was one of several proposals and in the end was seen as a legitimate effort to deal with a real problem, but an effort with many flaws. Proponents of the legislation pointed out it's specificity in setting spending limits as a percentage of GDP and it's flexibility in selecting which balanced budget amendment to support. Opponents noted the exemptions for social security, medicare, and the war on terror and stated that this showed that the plan was not willing to address the major spending issues of the day.

 

Legislation

Cut, Cap, and Balance Official Summary Text of Bill

 

Content of Cut, Cap, and Balance

The text of the cut, cap, and balance act is only 12 pages. It does not contain a proposed balanced budget amendment to the Constitution, but rather expresses support for numerous proposed amendments.

 

Cutting

The cutting section of the legislation makes it out of order for the House or Senate to consider any legislation that would cause the discretionary spending limits as set forth in this legislation to be exceeded. The discretionary spending limits are established at $1,019,402,000,000 in any new budget authority and $1,224,568,000,000 in outlays. An exemption is given for any bill or joint resolution relating to the global war on terrorism. For any 2012 spending bill dealing with the war on terrorism, the spending limit is raised to $126,544,000,000. It is also out of order for the House and Senate to consider any legislation that would cause total direct spending to exceed these limits, with the exceptions of Social Security, Medicare, Veteran's benefits, and net interest. The total combined outlays for all direct spending not exempted for fiscal year 2012 was not allowed to exceed $680,730,000,000.

 

Capping

To cap government spending, the legislation first defines ‘GDP’ as the gross domestic product during any fiscal year consistent with Department of Commerce definitions. The table below shows the caps that are set in place for the given fiscal years. The exempt programs are TRICARE for Life, Medicare (functional category 570), military retirement, Social Security (functional category 11 650), veterans (functional category 700), and net interest.

Caps for Government Spending
Fiscal Year Cap
2013 21.7%
2014 20.8%
2015 20.2%
2016 20.1%
2017 19.9%
2018 19.7%
2019 19.9%
2020 19.9%
2021 19.9%

 

Balance

This section states that the Secretary of the Treasury shall not exercise the additional borrowing authority provided in the cap section until the Archivist of the United States transmits to the States one of several proposed balanced budget amendments. The stated options include:

  • H.J. Res. 1 in the form reported on June 23, 2011
  • S.J. Res. 10 in the form introduced on March 31, 2011
  • H.J. Res. 56 in the form introduced on April 7, 2011
  • A balanced budget amendment to the Constitution, or a similar amendment if it requires that total outlays not exceed total receipts, that contains a spending limitation as a percentage of GDP, and requires that tax increases be approved by a two-thirds vote in both Houses of Congress for their ratification.

 

The Debt Ceiling

The cut cap and balance plan provided an increase in the debt ceiling to $16,700,000,000,000.

 

Votes on the Cut, Cap, and Balance Plan

The Cut, Cap, and Balance plan passed the House on July 19, 2011 along mostly party lines. Three Congressmen did not participate in the vote. On July 22, 2011 the plan was voted on in the Senate. That body voted to table the legislation along completely party lines.

House Vote

 

Senate Vote