Rep. Jim Jordan (R-OH), Chairman of the Republican Study Committee will introduce the Spending Reduction Act of 2011 at noon today. This Act reduces federal spending by $2.5 trillion over ten years. The bill will specifically hold FY 2011 non-security discretionary spending to FY 08 levels, hold non-defense discretionary spending to FY 06 levels thereafter for the rest of the ten-year budget window (the same level as in effect during the last year of GOP control of the Congress), and include more than 100 other program eliminations or savings proposals, consisting of proposals from the RSC Sunset Caucus, YouCut, or past RSC budgets. Below is a chart:
In a nutshell:
The Spending Reduction Act of 2011
+ $80 billion Take current non-security discretionary spending back to 2008 levels.
+ $45 billion Repeal unspent stimulus funds.
+ $46.1 billion End federal control of Fannie Mae and Freddie Mac & return Medicaid FMAP spending to 2008 levels.
+ $2.3 trillion On Oct. 1, 2011 (start of FY 2012), reduce non-defense discretionary spending to 2006 levels and implement a hard freeze through FY 2021 (removes inflation increase from CBO’s baseline).
Includes $330 billion from specifically targeting more than 100 programs and spending reforms (i.e. $7.5 billion annually by cutting the federal travel budget in half).
Also includes shrinking the size and cost of the civilian federal workforce (reduce workforce through attrition by 15% and no automatic pay increases for 5 years).
= $2.47 Trillion
Total savings add up to approximately $2.5 trillion when one includes reforms and reductions. The full document can be seen below:
I had the pleasure of being included on a conference call with Rep. Jim Jordan (R-OH), Rep. Scott Garrett (R-NJ) the Chairman of the Subcommittee on Capital Market and Government-Sponsored Enterprises for the House Financial Services Committee, and Sen. Jim Demint (R-SC) with a preview of their Spending Reduction Act.
There are hopes if this Spending Reduction Act is passed the US can realize $2.5T in savings over the next 10 years. This is the beginning of a process which will play out in the House and then will be passed over to the Senate, according to Sen. Demint. Although the time frame is up for debate, this is the only way we can save our country and our currency. A salient quote from Sen Demint:
We can’t mix free enterprise with socialism and expect it to work.
The Congressmen are ferretting out waste and have asked their constituents for input where costs can be cut and this plan is a starting point, to force a debate and pass a balanced budget amendment. If the Feds can cede control of many functions and programs back to the states it will be a win for all of us.
The plans are to introduce this as a “stand alone” legislation. When asked about the possible default of states and/or their state pension programs Sen. Demint responded there will be framework for the states to set up for bankruptcy, but he was firm that no states will be “bailed out.” THAT would:
devolve into a Ponzi scheme which would have worldwide consequences. We need to draw a line in the concrete, not in the sand.
Rep. Jordan stated this is “tough love” time and it will be difficult but we will all come through it and it will send a message to the White House the Republicans are committed to enacting a realistic budget and debt ceiling.
Tune in about noon or 12:15 pm today to hear the “unveiling.”
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