|Full title||An Act to enact fiscal control on the United States budget and reduce the deficit.|
|Enacted by the||111th United States Congress|
|Public Law||Pub.L. 112-25|
|Stat.||125 Stat. 239|
National Commission on Fiscal ResponsibilityEdit
On the first day in office as president, McCain called for Congress to pass legislation balancing the budget and reducing the national debt, a key campaign promise and a top legislative goal. This was followed by a policy speech at the White House on February 26, 2009, in which McCain announced his intentions of a deficit reduction plan. The goal of his plan was to reduce the annual deficit by at least $ 150 billion, and to have a a balanced federal budget with surplus by 2016. He also announced that he would work closely with both Republicans and Democrats to reach a deal equivalent to that in the 1997 Balanced Budget Agreement between a Republican-led Congress and a Democratic President Bill Clinton.
As a part of the economic management plan, McCain established on March 10, 2009 the National Commission on Fiscal Responsibility and Reform (also called Bowles-Simpson) by Executive Order 13531. The goal of the committee was to identify "…policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run." The commission consisted of six members appointed by the president, six members of the U.S. House of Representatives, and six members of the U.S. Senate — in total nine Democrats and nine Republicans. Among the members were Senators Russ Feingold (D-WI), Hillary Clinton (D-NY), Tom Coburn (R-OK) and Mike Crapo (R-ID). The commission first met on March 30, 2009, and a report was released on November 16, 2009. Later that day, a supermajority of 15 of 18 votes in favor formally endorse the blueprint.
McCain voiced his approval of the report, stating that "while I don't necessarily agree with everything in it, the report features a lot of suggestions worth considering. Based on this report, I will work closely with Congress to reach a bipartisan agreement to lower the debt and reaching the Administration's goal of a budget surplus by 2016."
Introduction in CongressEdit
On January 21, 2010, the Comprehensive Budget Control and Deficit Reduction Bill was introduced in the Senate by Senators Judd Gregg (R-NH) and Richard Durbin (D-IL), which McCain endorsed.
The bill featured an implementation of a five-year government spending freeze (starting in 2011) on discretionary programs (excluding national security, Medicare, Medicaid, and Social Security), implement the Bowles-Simpson plan, eliminate programs that are unaffordable or ineffective (including some military programs) as well as a reform on earmarks. He would also be willing to review all special spending provisions to end subsidies to high-income individuals and corporations.
In the Senate, McCain would in particular work with Senators Clinton, Obama and Feingold to get the necessary support from the Liberal wing of the Democratic Party, while Pawlenty worked closely with Republicans Saxby Chambliss (R-GE), Richard Lugar (R-IN) and Scott Brown (R-MA). McCain also held numerous meetings with former President Bill Clinton on the issue.
Some Republicans voiced their opposition to sections of the bill like allowing the expiration of the 2001 and 2003 Bush tax cuts on incomes above $200,000. While McCain himself also voiced his preference of also continuing all of the tax cuts, he would along with other moderate Republicans work to convince these members that compromise on this issue was necessary to get a bipartisan agreement on the budget cuts (which many Democrats opposed without supplementing it with ending the before mentioned cuts). Senators Lamar Alexander and Saxby Chambliss were vital in securing Republican support for the bill, emphasizing that fixing tax loop holes or even additional tax cuts could be implemented afterwards (McCain had announced that he would reduce corporate tax level from 35 percent to 29 percent). On the Democratic side, Clinton and Obama were joined by John Kerry and Joe Biden, who worked months on securing Democratic support. Bill Clinton also urged Democrats to work in favor of the bill, stating that "while not perfect, the bill would help reducing the deficit and national debt while restoring the people's faith in Congress."
On June 15, the bill was held up in the Senate after Jeff Sessions (R-AL) filibustered to stall the vote of the bill, claiming that the tax increases would harm the economy and reduce job growth. However, as enough support was guaranteed by convincing enough Republicans to vote in favor of the bill, the filibuster was overridden.
Vote and signingEdit
After months of negotiations between Republicans and Democrats (in which both McCain and Pawlenty personally were heavily involved in on a daily or weekly basis), a compromise was reached, and on on June 17, 2010, the bill passed the Senate with 67-33, with 41 Democrats and 26 Republicans voting in favor. On June 28, the House of Repesentatives passed the bill with 289-142, again with bipartisan support.
On July 2, 2010 McCain signed the bipartisan Comprehensive Budget Control and Deficit Reduction Act of 2010 into law. The legislation implemented a freeze in government spending for 5 years on discretionary programs (excluding national security, Medicare, Medicaid, and Social Security) starting with the 2011 budget and enforces limits on discretionary spending until 2021. The legislation enforced a $1.5 trillion reduction in the deficit over 10 years annual, with a goal of an annual $150 billion reduction in spending. A Congressional Joint Select Committee on Deficit Reduction was also established to propose deficit reductions. Procedures to increase the debt limit was also implemented. While the Bush tax cuts were extended for people with incomes under $200,000, the bill would end the tax cuts on incomes over $200,000 (providing $823 billion in revenue and save $127 billion in interest payment over 10 years).
- The bill directly specified $1 trillion of cuts over 10 years in exchange for increasing the initial debt limit with $900 billion
- A goal of $100 billion reduction annually in discretionary spending (excluding national security, Medicare, Medicaid, and Social Security), including eliminating earmarks.
- Cut defense discretionary spending by $60 billion by 2015.
- $14 billion reduction in farm subsidies.
- A 5-year government spending freeze on discretionary programs (excluding national security, Medicare, Medicaid, and Social Security)
- Limits on discretionary spending until 2021.
- Procedures to increase the debt limit.
- Establishment of a Congressional Joint Select Committee on Deficit Reduction to find further deficit reduction with a stated goal of achieving at least $1.5 trillion in budgetary savings over 10 years, and establishes automatic procedures for reducing spending by as much as $1.2 trillion if legislation originating with the new joint select committee does not achieve such savings.
- Implement an Alternate Measure of Inflation for COLA (Cost of Living Adjustment) by replacing CPI (Consumer Price Index) with a more accurate "chained CPI", saving $11 billion annually.
- Cap Medicare growth at G.D.P. growth plus 1 percentage point, starting in 2013. Among other things, this would crack down on many hospitals and doctors with the highest costs. Estimated savings are $29 billion by 2015 and $562 billion by 2030.
- Continue the 2001/2003 tax provisions for taxpayers with incomes under $200,000 (individuals) to $250,000 (joint filers).
- Discontinue the 2001/2003 tax provisions for high income taxpayers (from 35 percent 39.6 percent respectively in 2011 (providing $823 billion in revenue and save $127 billion in interest payment over 10 years).
- Capping itemized deductions at $50,000, providing $749 billion in revenue over 10 years.
- Gradually reduce the mortgage cap from the current $1.1 million to $500,000 ($41 billion over 10 years).
- Implement the Obama-Kyl proposal, which exempt the first $3.5 million from any taxable estate and index this level to inflation over time, while any estate value above $5 million would be taxed at a 35 percent rate (providing $24 billion worth of revenue by 2015).