The Cut, Cap, and Balance Act of 2011

CUT

Cuts total spending by $111 billion in FY 2012. The savings is divided as follows:

  • Reduce non-security discretionary spending below 2008 levels, which saves $76 billion.
  • $35 billion cut to non-veterans, non-Medicare, non-Social Security mandatory spending.
  • Defense budget at President's level.

CAP

Total federal spending is scaled back based on the glide path for the fiscal years below:

  • 2012, 22.5% of GDP.
  • 2013, 21.7% of GDP.
  • 2014, 20.8% of GDP.
  • 2015, 20.2% of GDP.
  • 2016, 20.2% of GDP.
  • 2017, 20.0% of GDP.
  • 2018, 19.7% of GDP.
  • 2019, 19.9% of GDP.
  • 2020, 19.9% of GDP.
  • 2021, 19.9% of GDP.

BALANCE

Requires the passage of a Balanced Budget Amendment before raising the nation's debt limit.

DEBT CEILING INCREASE CONTINGENT ON BBA

Provides for the President's request for a debt ceiling increase if a qualifying Balanced Budget Amendment passes Congress and is sent to the states for ratification.

Q&A: The Cut, Cap, and Balance Act of 2011

How much is the first year spending cut in the "cut" portion of the bill?

  • The legislation reduces spending by $111 billion in FY 2012.

Why $111 billion?

  • This savings total meets the promise to enact immediate spending cuts as part of any debt ceiling bill, and would cause the deficit to finally get back down below $1 trillion next year (a reduction to the previous year's deficit of more than $400 billion).

Does the legislation make any changes to Social Security or Medicare?

  • No.

Does the legislation make any changes to veterans spending?

  • No.

What does the legislation mean for defense spending?

  • It is at the same level as the House-passed FY 2012 budget.

Why cap spending at 19.9% of GDP?

  • This would place spending in line with average spending over the last 30 years.

What are the details of the Balanced Budget Amendment?

  • The legislation would require that any Balanced Budget Amendment include the following:
  1. A balanced budget component;
  2. A super-majority requirement to raise taxes; and
  3. A limit on spending as a percentage of GDP.

What is the process for the debt ceiling being increased?

  • Provides for the President's request for a debt ceiling increase if a Balanced Budget Amendment passes Congress and is sent to the states for ratification.

Why $2.4 trillion debt ceiling increase?

  • The President has requested that the debt limit increase by this amount. This amount is less than the amount of the spending cuts in this bill. A debt limit increase of this magnitude is a major sacrifice on the part of House Republicans, which is why it is made contingent on measures to ensure that the federal budget is permanently under control.