Top Democrat Misleads on Cut, Cap, and Balance

By Matt Cover | July 20, 2011 | 4:40 AM EDT

Rep. Chris Van Hollen, D-Md., right, at a news conference on Capitol Hill on Jan. 5, 2010. (AP Photo/Pablo Martinez Monsivais)

( – Rep. Chris Van Hollen (D-Md.), the ranking member on the House Budget Committee, made several inaccurate statements about the Cut, Cap, and Balance Act during a news conference on Tuesday.

Van Hollen, joining House Democratic Whip Steny Hoyer (D-Md.) at his weekly press briefing, said he thought it was important that the public know where the two parties stand on the budget-control legislation, saying the effort by the House GOP is not a “garden variety” balanced budget amendment.

“What this is, is an attempt to manipulate the Constitution of the United States to make it easier to end the Medicare guarantee than to close corporate tax loopholes, which is essentially the blueprint and framework of their entire budget,” Van Hollen said.

“Why do I say that? They’ve embedded two provisions into this constitutional proposal. One, they would make it as a matter of constitutional law that you can cut Medicare, Social Security, [and] education with a simple majority vote, but you need a two-thirds vote to cut an oil and gas subsidy for the purpose of reducing the deficit.”

Van Hollen’s statement is not accurate. Congress already has the constitutional authority to cut so-called non-discretionary programs, such as Social Security and Medicare, with a simple majority vote. Also, under the legislation, Social Security and Medicare are specifically exempt from the automatic spending cuts Congress must make if it exceeds the spending caps set out in the law.

Further, the two-thirds majority Van Hollen refers to is part of the balanced budget amendment included in the legislation. This amendment would require a two-thirds majority in both Houses of Congress to raise taxes. The amendment gives Congress broad discretion to define what would constitute a tax increase, meaning that the oil subsidies Van Hollen points to may not require a two-thirds vote to repeal them as he claims.

“The bill would, if necessary, enforce spending cuts through sequestration, which would automatically cut spending in order to maintain the caps.  Under the legislation, mandatory funding for Social Security, Medicare, veterans’ benefits and net interest would be exempted from sequestration,” a summary of the bill states.

House Budget Committee Chairman Paul Ryan, R-Wis., works with Republican members of the committee on Capitol Hill on Tuesday, April 5, 2011. He is flanked by Rep. Tom McClintock, R-Calif., right, with Rep. Bill Flores, R-Texas, at left. (AP Photo/J. Scott Applewhite)

Van Hollen’s characterization of the requirement to end certain subsidies also is not accurate. Under the Cut, Cap, and Balance Act, a two-thirds vote is required only if Congress wanted to raise taxes. The legislation does not specify whether ending certain tax expenditures would constitute a tax increase.

The bill says a balanced budget amendment must include a provision that “requires tax increases be approved by a two-thirds vote in both Houses of Congress.” It does not say whether eliminating certain subsidies would qualify as a tax increase under the law.

Van Hollen also said an amendment that had passed the House Judiciary Committee would cap spending at 18 percent of GDP, and he noted that the federal government had not spent under 18 percent of GDP since 1966. Van Hollen then linked that amendment to the Cut, Cap, and Balance Act, suggesting that the spending caps proposed by Republicans were unreasonable.

In 1966, according to U.S. budget data, federal spending was 17.8 percent of GDP. Since then, the spending has not fallen below 18 percent of GDP.

“If you look at the amendment that was voted out of the Judiciary Committee the other day, it writes into the Constitution a cap on expenditures of 18 percent of GDP. The United States has exceeded that cap every year since 1966,” he said. “Yet, the bill that was reported out of committee and the bill on the floor of the House today requires that you set an artificial cap -- the one that’s been voted out is 18 percent.”

While it is true that a House Judiciary Committee amendment would have set the cap at 18 percent of GDP, that amendment was not adopted. The actual caps in the Cut, Cap, and Balance Act never go below 19.6 percent of GDP, eventually settling at 19.9 percent of GDP in 2021.

The Cut, Cap, and Balance bill would increase the debt ceiling by $2.4 trillion while at the same time cut spending in fiscal year 2012 by $111 billion, cap spending in future years at a steadily decreasing level, eventually setting it at 19.9 percent of GDP in 2021, and pass a balanced budget amendment through both chambers  of Congress.

The debt ceiling increase would happen only after the balanced budget amendment has been passed by Congress and sent to the states for ratification.