House GOP wants $74 billion in budget cuts: Draconian or only a start?

The much-anticipated conflict between Republicans and Democrats in the new Congress over how much to rein in the federal deficit began in earnest Thursday.

House Budget Chairman Paul Ryan (R) of Wisconsin released his spending resolution, which sets a cap for the 2011 House budget. In all, it called for spending $74 billion less than President Obama has proposed and $35 billion less than was spent in 2010. Democrats denounced the figure as draconian, while some Republicans dubbed merely a start.

With his resolution, Congressman Ryan has given a sharper focus to the enormous gulf that separates the Republicans who control the House and the Democrats who control the Senate, as well as the difficulties ahead in bridging it.

“Washington’s spending spree is over,” said Ryan in a statement. “After two consecutive trillion-dollar budget deficits and with unemployment remaining unbearably high, we must chart a new course.”

The caps are an attempt to meet a Republican campaign promise. Republicans vowed to cut $100 billion from the budget deficit in their first year. Since the 2011 fiscal year is now four months old – with the government funded by a continuing resolution until March 4 – Ryan said the cuts would fulfill that promise.

“Because five months of the fiscal year will have passed by March 4, 2011, Congress has an increasingly shorter window of time to achieve savings in this fiscal year,” Ryan said.

House Republicans have invested Ryan with unprecedented powers to unilaterally set discretionary-spending limits for the current fiscal year, saying such action was needed because the previous Congress failed to pass a budget. His proposed spending resolution caps 2011 discretionary spending at $1.005 trillion and includes an unexpected $16 billion in cuts for defense and security spending, along with $58 billion in other discretionary spending cuts.

The proposed caps aim to bring the government back to “pre-stimulus, pre-bailout levels.”

Republican: 'We're going to have to ... cut much more.'

But some conservatives say that’s not enough. The Republican Study Committee had called for the promised $100 billion in cuts, no matter when they start to take effect. RSC members say that they will offer amendments when the spending bills come to the floor to bring cuts this fiscal year to at least $100 billion.

“Anything short of our pledge to cut $100 billion from FY11 will be getting off on the wrong foot,” said Rep. Jeff Flake (R) of Arizona in a statement. “We can’t ignore the fact that our budget deficit is clocking in at $1.5 trillion and our debt at more than $14 trillion. We’re going to have to do much better and cut much more.”

Rep. Hal Rogers (R) of Kentucky, who chairs the House Appropriations Committee, said in a statement that his panel “may go even further to find savings in virtually every area of the federal government.”

With a majority of 242 to 193, House Republicans have the clout to move cuts, but the plan faces strong opposition in the Democrat-controlled Senate. Democrats say that the proposed cuts in fiscal year 2011 will set back economic recovery and put people out of work.

Democrat: It's Russian roulette

“The chairman of the Budget Committee today sent us something even more draconian than we’d originally anticipated,” said Senate majority leader Harry Reid (D) of Nevada at a press briefing today.

“We’re not burying our heads in the sand,” he added. "We recognize that we have to do some things. But we’re not willing to play Russian roulette with not extending the [continuing resolution] in a reasonable fashion and certainly not raising the debt limit.”

Economist Mark Zandi, who testified before the Senate Budget Committee Thursday, cautioned against deep cuts in a recession. “I don’t believe it is necessary – in fact I don’t think it’s prudent – to begin those austerity measures in calendar year 2011,” he said at a briefing with Senate Democrats today. “I think the economic recovery is gaining strength. I’m optimistic about its prospects in large part because of the policy response.”

Mr. Zandi is chief economist for Moody’s Analytics, a former adviser to GOP presidential nominee John McCain, and, more recently, a key resource for Senate Democrats.

Senate Democrats caution that a push for deep cuts in the current fiscal year could lead to a government shutdown in March – even before the long-awaited showdown over raising the $14.3 trillion debt limit, expected to come before the Congress in April.

“Cooler heads should prevail,” said Senator Reid at today’s briefing. “That’s what Mark Zandi has said, and that’s what every one of us has said.”