Last weekend, before the debt-limit agreement was reached, Sen. Harry Reid gave a speech on the Senate floor in which he railed against the GOP for demanding spending cuts in exchange for a debt-limit increase. Since 1962, Reid bellowed, Congress had raised the debt limit 74 times without ever demanding concessions in exchange.
He is right. As I pointed out in my Post column this week, the most important aspect of the debt-limit deal – one that has been overlooked by many conservative critics – is the new precedent that has been set by the legislation: Henceforth, debt-limit increases must be “paid for” with equal or greater cuts in spending.
When House Speaker John Boehner set this new benchmark, he may not have realized that he had discovered the key to balancing the federal budget. But Sen. Rob Portman (R-Ohio) — former White House budget director — has crunched the numbers and this is what he found: If we stick to this principle — if we continue to cut a dollar of spending for every dollar we raise the debt limit — we will balance the budget in 10 years.
In the Wall Street Journal this morning, Portman writes:
Using Congressional Budget Office data, I have calculated that if we apply this every time we reach the debt limit over the next 10 years, we will balance the budget by 2021 without raising tax rates over current rates. That’s more than $5 trillion in spending cuts over the decade. And because many of these spending reforms would necessarily carry over past 2021, the savings in the following decade would be even larger. If this framework were followed, starting in 2021 budget surpluses would end the era of debt-limit increases.
That is something that even the Paul Ryan budget, which conservatives rallied around, would not achieve.
With this bill, Republicans have established the formula for bringing our budget into balance. And imagine: If we cut a little more than a dollar of spending for every dollar we raise the debt limit, we could balance the budget even sooner.