Manchin endorses spending caps, balanced-budget amendment

Republicans appear to be winning the budget battle on Capitol Hill as well as with the electorate.  Senator Joe Manchin, who has to face his constituents again next year after winning a special election to fill out Robert Byrd’s term of office, has announced that he will split with his Democratic party leadership to support major structural reforms to the federal budget:

Freshman Sen. Joe Manchin (D-W.Va.) on Tuesday announced his support for strict spending caps that put him at odds with his party’s leadership and President Obama.

Manchin told an audience in South Charleston, W.Va. that he would endorse the “CAP Act,” which sets a tighter spending limit than the president’s budget calls for, as well as a balanced-budget amendment to the Constitution.

The senator suggested the legislation could help Republicans and Democrats agree to a deal to raise the nation’s $14.3 trillion debt ceiling.

Passing both would place serious limitations on all government spending, not just discretionary spending.  The GOP’s proposal for a balanced-budget amendment would cap federal spending at 18% of projected annual GDP, which means that Manchin has some other formulation in mind on that score.  The CAP Act would apply separately as law rather than a constitutional requirement and set the spending limit at 20.6% of GDP, five points lower than now.  It would have enforced a limit on the budget this year of $2.95 trillion, which would have cut the deficit in half — but not eliminate it.

In contrast, the GOP’s comprehensive balanced-budget approach would have forced a budgetary limit of $2.57 trillion.  That would still leave a significant deficit of over $300 billion, but certainly one more manageable than the flood of red ink we are currently experiencing.  Of course, just because both would impose upper limits doesn’t mean that Congress would have to spend to the limit.

The two approaches have one thing in c0mmon: both assume major entitlement reform by basing the proposals on serious cuts in spending.  Even Manchin’s proposal cuts $800 billion from federal spending, and  non-security discretionary spending only accounted for $450 billion in Barack Obama’s FY2011 budget proposal.  The only way to extract that much spending from the budget is to seriously alter entitlements to slash their costs.

Manchin’s proposal may not be as clear as Republicans would like on entitlement reform or as low as they would prefer on the spending cap.  However, Manchin’s announcement makes it plain that the budget battle will be fought on Republican terms.