Fiscal Discipline
Our federal budget should be a statement of our national values. One of those values is responsibility. Working with President Barack Obama, Democrats in Congress are ending the Bush Administration's irresponsible budget policies that have produced historic deficits. Instead of piling trillions of dollars of debt onto our children and grandchildren, we have restored Pay-As-You-Go budget discipline, adopted fiscally responsible budgets, and worked to stop waste, fraud, and abuse to ensure that taxpayers' money is not wasted.
On March 25th, the House Budget Committee adopted a budget resolution that builds on the efforts of the Democratic-led Congress over the last two years to restore fiscal accountability.
Learn more about the budget resolution>>
Cutting the Deficit
- The House budget resolution slashes the deficit by nearly two-thirds over the next four years -- from $1.7 trillion or 12.3% of GDP in 2009 to $586 billion or 3.5% of GDP in 2013.
- Reforming health care is one of the best ways to reduce the deficit – with reduced health care costs, affordable coverage and improved health reducing the strain on businesses, families, and federal and state budgets.
Pay-As-You-Go Budget Discipline
- The first thing the Democratic-led Congress did in January 2007 was reimpose PAYGO budget rules in the House rules that Republicans had let lapse.
- The House budget resolution also reaffirms our commitment to statutory PAYGO.
- Like the President’s budget, the House budget resolution calls for health care reform, the clean energy initiative, and the college affordability initiative to be completely deficit-neutral – creating deficit-neutral reserve funds.
Cutting Waste, Fraud, Abuse, and Obsolescence
- The House Democratic Leadership has directed Committee Chairs to hold hearings and carefully review all federal spending within their jurisdiction in order to eliminate waste, fraud, abuse, and obsolescence.
- The House budget resolution contains key integrity initiatives to protect taxpayer money by rooting out any waste, fraud and abuse, saving nearly $50 billion. It invests in efforts to crack down on provider fraud, reduce improper payments, and strengthen efficiency in such programs as Medicare and Social Security. It calls for major reforms in federal contracting and procurement, particularly at the Department of Defense where there have been billions of dollars in documented abuses of no-bid contracts and overpayments.
Collecting Unpaid Taxes
- The House budget resolution steps up IRS enforcement to collect unpaid taxes from those who are not paying what they owe. It is estimated that the annual “tax gap” of unpaid taxes is more than $300 billion. Every $1 spent on IRS enforcement generates $5 in owed taxes collected.
The Bush Legacy
The Bush Administration had the worst fiscal record in American history. When President Bush was inaugurated in January 2001, he inherited from President Clinton, according to CBO, a budget surplus projected to be $5.6 trillion over the next 10 years. Over the last eight years, through fiscally reckless policies, President Bush squandered that surplus and gave the country eight years of large deficits instead.
When President Obama was inaugurated last month, he inherited from President Bush, according to CBO, a deficit of $1.2 trillion for FY 2009 alone and trillions more in deficits over the next 10 years. Under President Bush, the national debt almost doubled – rising from $5.7 trillion to $10.6 trillion.
A First Step of the Democratic-Controlled Congress: Restoring Pay-As-You-Go Budgeting
- When Democrats took control of Congress in January 2007, we were determined to try to change the fiscally reckless practices of the Bush Administration; but President Bush fought us on most issues.
- When Democrats took control of Congress, within the first 24 hours, the House restored strict pay-as-you-go budget rules, requiring that new spending be offset. The Senate also adopted these rules. In the 1990s, with the help of these pay-as-you-go rules, the Clinton Administration had turned deficits into surpluses.
- Under the Bush Administration, the GOP-led Congress had allowed these critical pay-as-you-go rules to expire in 2002 – helping to lead to an explosion in budget deficits and the national debt.
- Unfortunately, throughout 2007 and 2008, the Bush Administration fought these pay-as-you-go budget rules, and President Bush put out veto threats on dozens of bills, often objecting to the offsets that covered the bills’ costs.
- And, throughout 2007 and 2008, the Bush Administration continued to pursue its extremely fiscally irresponsible policies, including: waging an expensive war in Iraq without identifying any ways to pay for it, and using budget gimmicks to hide the true costs of its policies, such as not budgeting for disasters.
Adoption of Fiscally Responsible Budgets
- Both in 2007 and 2008, the Democratic-controlled Congress adopted fiscally responsible budget resolutions – budget resolutions that achieved balance within five years.
- These budget resolutions included tough program integrity initiatives to crack down on wasteful and fraudulent spending in such programs as Social Security and Medicare.
- They also included requirements of performance reviews of programs across the federal government, to examine their cost-effectiveness and efficiency.
Enactment of Provisions to Enhance Accountability and Combat Waste, Fraud and Abuse
- A top priority of the New Direction Congress was to enact measures to enhance accountability and beef up oversight to ensure taxpayers’ money is not wasted on no-bid contracts for Halliburton and the like.
- For example, in 2007 and 2008, as part of the Defense Authorization bills, the New Direction Congress enacted key reforms to combat waste, fraud and abuse in government contracting. These reforms included achieving savings for the U.S. taxpayer by minimizing non-competitive contracts.
- In addition, as part of the FY 2009 Defense Authorization bill, the Congress enacted a measure that creates a centralized database that will list civil, criminal, and administrative proceedings concluded by federal and state governments against federal contractors, in order to track fraudulent contractors.
- In October 2008, the Congress also enacted H.R. 928, which contains a number of provisions to enhance the effectiveness and independence of Inspectors General, which are the principal watchdogs to prevent waste, fraud and abuse in their agencies’ programs.
House Hearings on Achieving Deficit Reduction and Long-Term Fiscal Responsibility
- For 2009, Speaker Nancy Pelosi has asked each House committee chairman to hold a series of hearings on all aspects of federal spending and government operations in the departments and agencies under their jurisdiction, in order to help identify ways to achieve deficit reduction and long-term fiscal responsibility. Speaker Pelosi has asked committee chairmen to announce a schedule for such hearings no later than March 13, 2009.
Unprecedented Economic Crisis Has Required An Emergency, Two-Year Recovery Plan
- Our country is currently experiencing an unprecedented economic crisis – the worst economic crisis since the Great Depression.
- Economists from across the ideological spectrum – from left to right – agreed that it was critical to enact an emergency recovery package, in order to jumpstart the economy. They recognized that the only way to solve our long-term budget problems was to get the economy growing again.
- The emergency, two-year recovery plan that President Obama signed into law on February 17 will save or create 3.5 million jobs, immediately cut taxes for 95 percent of American workers, and invest more than $100 billion in infrastructure.
To Ensure Taxpayer Dollars Are Well-Spent, Recovery Plan Includes Unprecedented Transparency and Accountability
- Congressional Democrats worked with President Obama to include in the Recovery Plan provisions to ensure taxpayer dollars are spent with unprecedented accountability, oversight, and transparency.
- Americans will be able to track online how funds are spent and all announcements of contract and grant competitions and awards, posted on a special website, www.recovery.gov.
While Emergency Recovery Plan Necessary, Congress Remains Committed to Long-Term Fiscal Responsibility
- While knowing that the two-year recovery plan was critical at this time, the New Direction Congress is also committed to working with President Obama on achieving long-term fiscal responsibility.
- As President Obama has stated, “We’ve inherited a trillion dollar deficit – which we must add to in the short term to jumpstart our sick economy. But our long-term economic growth demands that we tame our burgeoning federal deficit.” The New Direction Congress will work closely with the President to achieve this critical goal.