On Wednesday, the Joint Select Committee on Deficit Reduction (JSCDR) held their third public hearing to focus on federal government discretionary spending. The hearing comes just one day after what is being reported as heated discussions took place over entitlement and tax reforms in a closed meeting of the JSCDR.
CBO (Congressional Budget Office) Director Doug Elmendorf testified before the JSCDR on discretionary spending which totaled $1.277 trillion in 2011, or 40 percent of all federal outlays.
The Department of Defense makes up a little over one-half of discretionary spending totaling $712 billion annually.
About $566 billion in non-defense discretionary spending is divvied up among natural resources and environment; general science, space and technology; general government; community and regional development; agriculture; Medicare and Social Security (for administrative activities); energy; and commerce and housing credit.
In his testimony Elmendorf highlighted a positive note, “Lawmakers have already taken significant steps to constrain discretionary spending,” pointing to the fact that total discretionary funding in 2011 was lower than it had been since 2002.
Elmendorf also warned the committee of the possible dire consequences that may befall the U.S. economy if they failed to reach a consensus. This warning coincides with the forecast released on Friday by Bank of America Merrill Lynch that the “credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan” to cut the deficit.
To read CBO Director Elmendorf’s testimony in its entirety go to: http://www.cbo.gov/ftpdocs/124xx/doc12490/10-26-DiscretionarySpending_Testimony.pdf