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Letter to the Senate Finance Committee Opposing Spending Caps

May 03, 2011

Dear Senator:


In advance of this week’s Senate Finance Committee hearing on “Budget Enforcement Mechanisms,” we would like to express our strong opposition to proposed global federal spending caps.  These proposals, including the McCaskill-Corker proposal to cap spending at 20.6 percent of GDP, would be devastating for those most vulnerable in our nation, would undermine economic recovery, and would jeopardize our future strength.  We strongly urge you to oppose such caps.

Educators understand that Congress must work to ensure America’s long-term economic prosperity and that we must address the nation’s serious fiscal challenges.  However, cutting education funding and slashing programs that serve children, the elderly, and working families is not the answer.  It simply will not be possible to reduce spending to the levels required by the McCaskill-Corker proposal without massive cuts in education, Medicare, Medicaid, Social Security, and other programs that meet crucial national needs.   In fact, the caps would require the largest cuts in federal spending in modern history.

Global spending caps are the wrong approach to addressing our fiscal challenges.  Tax cuts for the wealthy enacted under the last administration and renewed in 2010 are the single largest contributing factor to the deficit.  These tax cuts will cost $1 trillion over the next ten years.  These funds could be much better spent to help strengthen our nation. For example, investing in education makes both good fiscal sense and good public policy, while slashing such funding undermines economic stability.  Funding targeted to quality public schools will see the greatest return on taxpayer money and will strengthen the entire economy.  Attached for your information are several charts comparing the cost of tax cuts for the wealthiest with that of providing Title I ($476 billion to fully fund Part A), special education ($306 billion to meet the federal governments promised level), and Pell Grants ($544 million to increase the maximum award by $400 a year) to those in need.  In addition, we have provided a series of charts showing the projected impact of the spending caps on key education programs.

Global spending caps threaten to repeat the failures of the state-level “Taxpayer Bill of Rights (TABOR)” enacted during the 1990’s.  Under TABOR, state-wide referenda established state-wide budget ceilings and very high thresholds for exceeding the limits.  They effectively nullified election results by tying the hands of state elected officials and reducing services across the board.  As a result, voters and elected officials were held hostage by simplistic formulas perpetrated by their predecessors.  In Colorado, TABOR resulted in a drop in per pupil K-12 education funding from $200 less than the national average in 1992 to $1000 less than the national average in 2006.  Colorado business leaders were so concerned about the effects of the Colorado TABOR initiative that they began a letter writing campaign in 2006 urging business leaders in Maine, Michigan, and Oregon to reject similar efforts.

The McCaskill-Corker proposal would constitute exceedingly unwise economic policy.  It would risk tipping a faltering economy into recession and slowing economic recovery.  It would determine spending levels for decades and tie future Congress’ hands.  Arguments that the proposal would set spending levels at historical levels are misleading and ignore current realities – the pending retirement of baby boomers and the projected 35 percent increase in the number of Americans over age 65 by 2020; two ongoing wars and military action in Libya; costs associated with post-September 11th homeland security measures; continued rising health care costs; and the continuing effects of the recession. 

Global spending caps will put our nation at great risk by decimating public education and other programs that ensure a competitive workforce and future economic vitality.  We strongly urge you to oppose these dangerous proposals.

Sincerely,

Kim Anderson        
Director of Government Relations

Mary Kusler
Manager of Federal Advocacy