The Word: Spending Caps

Definition: Spending caps are limits imposed on the amount of budget authority provided in annual appropriations bills.

Used In A Sentence: “The Democratic-led appropriations panel added $91 billion to the spending “cap” called for under current law, setting out on a collision course with the GOP-dominated House, which has opted to stick within the spending limits mandated by Washington’s inability to follow up the 2011 law with another deficit-reduction deal.” From “Senate Dems Ignore Budget Limit, Add $91B To Spending Cap,” Associated Press, June 20, 2013.

History: Spending Caps are a mechanism used by governments to limit the amount of federal spending to avoid creating a deficit and/or adding to their national debt. A major piece of legislation that addressed this issue was H.J. Res. 372, the Balance Budget and Emergency Deficit Control Act of 1985, also known as the Gramm-Rudman-Hollings Act.The main purpose of the Act was to implement a maximum amount of deficit that the federal government could allow, and over a five year period, decrease that amount until there was no deficit allowed. On August 2, 2011, President Obama signed the Budget Control Act, which placed enforceable spending caps on both defense and nondefense discretionary spending over the next ten years. In the 112th Congress (2011-2012), S. 245, the Commitment to American Prosperity Act, was introduced and would have amended the Gramm-Rudman-Hollings Act to enact a spending cap of 20.6 percent of the national gross domestic product (GDP). The bill died at the end of the 112th Congress.