Last year, the House Republicans presented the Limit, Save, Grow Act with an aim to restore fiscal responsibility by returning total base discretionary spending to fiscal 2022 levels, a cut from current levels of around $130 billion1. However, the recently announced Fiscal Responsibility Act falls far short of this mark.
The Fiscal Responsibility Act, announced by President Joe Biden and Speaker Kevin McCarthy, R-Calif, proposes to cut discretionary spending by a mere $12 billion in fiscal 2024. This amounts to only 9% of what the Limit, Save, Grow Act had offered. Underneath the surface, the bill proposes a $40 billion cut in non-Veterans Affairs, non-defense discretionary spending. However, it spares VA funding and boosts defense funding by $28 billion, which leaves the total cut at a significantly low level of $12 billion1.
Adding to the fiscal burden, the Fiscal Responsibility Act also includes a student loan cancellation provision. The legislation proposes to forgive up to $10,000 in student loans for borrowers earning less than $125,000 per year. However, the implications of this provision are far-reaching. The student loan forgiveness provision alone could cost taxpayers upwards of $416 billion over 10 years1.
The Fiscal Responsibility Act also fails to deliver on pro-growth policies. It lacks any proposals to reduce taxes, which are fundamental to stimulating economic growth. Instead, it proposes a 15% minimum tax on corporations with book income over $1 billion, which goes against the tenets of the House Republicans’ plan to cap them1.
In conclusion, while the name of the Fiscal Responsibility Act suggests fiscal prudence, the measures it contains fall far short of the spending cuts and pro-growth policies proposed in the Limit, Save, Grow Act. As we navigate the economic challenges ahead, it is important to critically evaluate the impact of such legislation on our economy and the burden it places on taxpayers.
This analysis is based on the article “Limit, Save, Grow Turns Into Limited Savings and Growth” by Richard Stern, published on The Daily Signal on May 30, 20231.