Debt Limit, Debt and Deficit Reduction Debacle July 24, 2011
As the debt limit, debt and deficit reduction talks continue in Washington, D.C., several so-called alternate "plans" have recently emerged in the event a compromise isn’t reached before the U.S. Treasury Department’s arbitrary August 2 deadline. Unfortunately, these measures are late to the game, rely heavily on tax increases and promises of future reductions, and in the end, aren’t really plans at all. House Republicans are the only ones to have offered a solid, definitive plan to reduce the deficit – cut government spending now, cap spending in the future, and balance the budget.
Gang of Six "Plan"
On Tuesday, the Senate’s "Gang of Six" offered broad outlines for future deficit reduction. However, there are no definitive details or actual legislation, and a number of provisions in the outline concern me. First, it relies on "revenue increases" of more than $1 trillion to decrease the deficit. Revenue increases is simply another way of saying "tax increases." Closing tax loopholes in order to lower the individual and corporate tax rates has merit, but the Gang of Six plan increases taxes to the tune of $1 trillion. Some estimates indicate that coupled with the expiration of the Bush tax cuts and increased taxes from Obamacare, this plan would raise taxes by $2.8 trillion overall. Second, the plan does very little to contain the spiraling cost of health care, instead leaving much of Obamacare in place. It calls for $117 billion in health care savings, but does not specify from where these savings would come. Third, this plan cuts defense spending by $886 billion, a severe blow to our men and women in uniform that would leave our country open to future threats.
Finally, and most importantly, the Gang of Six plan makes only modest cuts now while relying on hollow promises of potential cuts in the future. In other words, there is no plan. Senate committees would be tasked with achieving a certain amount of savings or tax increases. There is nothing in the plan to suggest how these savings might occur, who would be affected, or even if it will get done. Certainly the Democrat-controlled Senate committees would do little to change entitlement programs, relying instead on tax increases rather than spending cuts to achieve these "savings." If, and only if, the tax and entitlement changes pass by a supermajority of 60 votes in the Senate, would Senators move on to tackling social security reform. If this is the "grand bargain" President Obama has been hoping for, I would ask, who exactly is getting the bargain?
McConnell/Reid "Plan"
While the Gang of Six outline has a few provisions that could be included in final deficit reduction talks, the McConnell-Reid plan to transfer authority for a debt ceiling increase to the President is far worse. It would give the President the authority to unilaterally raise the debt ceiling three times over the next year and a half. Congress could only stop a debt ceiling increase with an expression of disapproval requiring, which the President could veto. This idea circumvents the rights of American citizens to have a say on the debt ceiling increase and avoids the tough decisions that must be made to sustain a viable and vibrant American economic future. Again, it is not a plan, just another way to kick the can down the road and avoid dealing with these tough issues.
Cut, Cap, & Balance
The media has argued frequently that House Republicans need to compromise. We have compromised, and that compromise is the Cut, Cap, and Balance Act passed this week in the House with bipartisan support. It is the only deficit reduction plan that has been offered, that is clearly defined, and that will reduce government spending.
Cut, Cap, and Balance provides immediate cuts, caps future spending, and ties any debt ceiling increase to a balanced budget amendment. The cuts come now, not over ten years. The caps limit spending to under 20 percent of U.S. GDP, pushing government spending back to historical norms. And, it balances the budget by requiring a Balanced Budget Amendment to the Constitution before raising the debt ceiling, forcing Congress to pass balanced budgets instead of taking on more debt.
Unfortunately, on Friday the Senate Democrats used a procedural move to permanently table the Cut, Cap, and Balance bill. So I ask, Senator Reid, where is your plan?
The Senate has not offered a plan and the President has not offered a plan. House Republicans have offered a plan, took a vote on that plan, and let the American people know where we stand when it comes to solving our country’s debt crisis. Cut, Cap, and Balance is the only way we can truly balance the budget. Reducing our national deficit is not only a necessity, but an opportunity to fundamentally change the way Washington does business. We must rein in spending, balance the budget, and ensure we leave our country a better nation today and for future generations.
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