Discretionary spending caps included in debt-ceiling deal

House Republicans promised during the 2010 election to "set strict budget caps to limit federal spending on an annual basis." With enactment of the debt-ceiling deal on Aug. 2, 2011, they achieved that goal.

According to a Congressional Budget Office analysis of the bill, the Budget Control Act of 2011 -- as the debt ceiling deal was called -- "would impose caps on appropriations of new discretionary budget authority that start at $1,043 billion in 2012 and reach $1,234 billion in 2021.” Discretionary spending refers to outlays that are appropriated by Congress and are not determined by a pre-set formula.

CBO added that the caps "would not apply to spending for the wars in Afghanistan and Iraq and for similar activities, sometimes referred to as overseas contingency operations, or to certain amounts of additional spending for "program integrity” initiatives, for which the act would allow upward adjustments to the caps by specified amounts. In addition, the legislation provides for adjustments to the caps in each fiscal year to account for funding designated for emergency requirements and disaster relief. The cap adjustments for disaster relief would be limited to amounts based on historical averages for such funding.”

In addition, the bill established a Congressional Joint Select Committee on Deficit Reduction tasked with reducing the deficit by at least $1.5 trillion between 2012 and 2021. If it doesn't succeed in making these additional cuts, the bill would require cuts by Jan. 15, 2012 to make up for any shortfall in that targeted savings. "Those automatic reductions in spending would be spread evenly over the fiscal years 2013 through 2021; half would come from defense spending and half from nondefense spending, including both discretionary and direct spending,” CBO said.

This approach differs somewhat from the bill that passed the House before being rejected by the Senate. The House-passed 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 exempted spending on Social Security, Medicare, veterans benefits and interest on the debt.

We asked Steve Ellis, vice president of the non-partisan budget group Taxpayers for Common Sense, if he thought the enacted bill qualifies as a Promise Kept. He said it did. We agree. We rate this a Promise Kept.