Senate kills 'cut, cap and balance'

House Republicans promised they would set a "hard cap" on discretionary spending, and on Tuesday, such a measure did pass in the U.S. House of Representatives. But the measure died in the Senate.

The bill, known as "cut, cap and balance," would have cut discretionary spending, capped future spending, and promoted a balanced budget amendment to the Constitution, which would have been passed separately.

The cap on future years was set at 18 percent of Gross Domestic Product. GDP is a common measure of the overall size of the economy. The cap would have exempt spending on Social Security, Medicare, veterans benefits, or interest on the debt.

The "cut, cap and balance" bill passed the House on a vote of 234 to 190 on July 19, 2011. But the Senate voted it down on a party-line vote, 51-49, on July 22. Additionally, President Barack Obama had vowed he would veto the bill if it did pass. 

So is a hard cap on spending dead? Not necessarily.

A proposal to address the nation's debt problems from six senators known as the Gang of Six includes a cap on discretionary spending. That proposal hasn't come up for votes in Congress, but it's being widely discussed in Washington as part of a compromise to raise the debt ceiling by Aug. 2, 2011, an important looming deadline.

A cap might be included in other legislation going forward, and the fact that "cut, cap and balance" passed the House would be a positive sign for that, said Steve Ellis, vice president of Taxpayers for Common Sense, an independent group that analyzes federal spending. 

"Certainly getting a majority of the House supporting it indicates that the idea is alive and will be as long as we are in this deep fiscal quagmire," he said.

The U.S. House of Representatives did pass a hard cap on new spending, but it did not pass the Senate. We don't think a spending cap is dead, but it has been dealt a blow. So for the time being, we rate this promise Stalled. We'll be watching in the next two weeks and will change the rating if the cap re-emerges in a final plan.