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Tennessee: Deficit projections ignite talk in Congress of spending cuts

By: Herman Wang
(Contact)

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Lincoln Davis
Zach Wamp

WASHINGTON — Projections of a record-setting national deficit in 2009 have members of Congress agreeing that fiscal belt-tightening is necessary.

Whether there will be the political willpower to enact any spending cuts is the bigger question.

“I have never been in an arena like this where there is absolutely no construct for fiscal discipline,” Sen. Bob Corker, R-Tenn., said. “We just spend money, raise the debt ceiling and move on. We have got to somehow get in the mode that when we spend money, we figure out ways to pay for it.”

The Congressional Budget Office this week projected that the federal government will run a deficit of $407 billion this year, with that figure rising to $438 billion next year.

The estimates do not include future liabilities from Medicare or Social Security and also do not take into account the recently announced government takeover of mortgage giants Fannie Mae and Freddie Mac, meaning the projections could be significantly lower than the actual deficit.

The largest-ever deficit, in dollar terms, was $413 billion in 2004.

The CBO, a nonpartisan office that supplies economic forecasts for Congress, attributed the rising deficit to the weak economy, high energy prices and deteriorating housing and financial markets

Rep. Lincoln Davis, D-Tenn., said Congress’s current pay-as-you-go rules, under which all new spending has to be offset with either new taxes or cuts in spending elsewhere, were instituted by the Blue Dogs, a coalition of fiscal conservative Democrats, and have helped restore some fiscal responsibility to both parties.

“There’s been times we’ve shut down legislation because it doesn’t comply with the pay-go rules, and I will continue to do that,” he said.

But Sen. Johnny Isakson, R-Ga., said with the country waging wars on two fronts in Iraq and Afghanistan, deficits are to be expected. However, he said the shortfalls can be fixed if lower taxes are used to stimulate economic activity.

“We need to make sure we have good tax policy,” he said. “That doesn’t mean raising taxes to offset spending but to make sure taxes incentivize economic growth.”

Rep. Zach Wamp, R-Tenn., said he introduced a bill that would create a commission to evaluate spending proposals. The nonpartisan commission would review all earmarks and have to sign off on them before Congress would vote on them.

The commission also could review entitlement spending on programs such as Medicare and Social Security, which make up the bulk of the federal budget, he said.

“That puts it out of the political sphere, and they’ll give an honest assessment for an up-or-down vote,” Rep. Wamp said. “If the stark reality is put before Congress in that clear way, we can vote to make these changes. It’ll be painful, but it’s the only responsible course of action.”

Sen. Corker said he supports a similar bill in the Senate.

“You have a divided Congress, and there’s a lot of self-interest out there,” he said. “The crisis stage is not too far around the corner, and all of us will have to act like adults as it relates to federal spending.”

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