The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 5)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
WASHINGTON (DC) Congressman Ben Quayle (R-AZ) released the following statement Monday after voting against the amended Budget Control Act:
“Last week I voted for the Boehner plan because— while imperfect—it made adequate strides to get our fiscal House in order. The final debt-ceiling bill, however, goes in a direction that I cannot support. Due to the design of the bill’s trigger mechanism, I am concerned that President Obama will be able to use the threat of tax hikes and drastic defense cuts to continue to amass record levels of spending.
“Though I didn’t support today’s bill, I want to commend Speaker Boehner and the House Republican Leadership for changing the culture in Washington and compelling Congressional Democrats and the Obama Administration to finally recognize how central America’s debt problem truly is.
“On another note, it was a very special moment seeing Congresswoman Gabby Giffords cast her vote on the House Floor tonight. Both sides of the aisle greeted her with a loud standing ovation. It was a nice way to end what has been a very tense few days in the House.”
The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 4)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Washington, D.C. – Congressman Trent Franks (AZ-02), on the heels of his vote against the debt ceiling plan proposed yesterday, released the following statement, reiterating his remarks last night on the House floor emphasizing the vital importance of a Balanced Budget Amendment:
“It is simply undeniable at this point that Democrats do not grasp the threat posed by our perpetual deficit spending and ever-ballooning debt. Even as the debt ceiling has been raised yet again, Democrats, who claim to support a Balanced Budget Amendment, despite having opposed BOTH Balanced Budget Amendment proposals that passed the House, have again made certain to include numerous exceptions into the debt ceiling legislation, so that a Balanced Budget Amendment to permanently fix our deficit spending problem is not a requirement, but an option they can opt out of at a later date.
“Lip service to a balanced budget it no longer enough. All financial budgets will eventually balance. That includes the budget of the United States government. The question before our nation now is whether our budget will balance due to proactive work by those of us sent to fix the broken system in Washington, or by financial calamity due to the unwillingness of so many to stop a looming disaster when we had the opportunity to do so.”
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Congressman Franks is serving his fifth term in the U.S. House of Representatives and is a member of the Judiciary Committee, where he serves as Chairman of the Subcommittee on the Constitution and a member of the Subcommittee on Courts, Commercial and Administrative Law. He is also a member of the Armed Services Committee, where he serves on the Strategic Forces Subcommittee and the Subcommittee on Emerging Threats and Capabilities.
Congressman Franks is serving his fifth term in the U.S. House of Representatives and is a member of the Judiciary Committee, where he serves as Chairman of the Subcommittee on the Constitution and a member of the Subcommittee on Courts, Commercial and Administrative Law. He is also a member of the Armed Services Committee, where he serves on the Strategic Forces Subcommittee and the Subcommittee on Emerging Threats and Capabilities.
Over and over conservatives have warned that a US default was not the main thing we needed to fear but not cutting our budget enough to avoid a downgrade of the US credit rating. Now it has happened just as we feared!!!
Credit rating agency Standard & Poor‘s on Friday downgraded the United States‘ credit rating for the first time in the history of the ratings.The credit rating agency said that it is cutting the country’s top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country’s debt situation.
A source familiar with the discussions said that the Obama administration feels the S&P’s analysis contained “deep and fundamental flaws.”
S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.
S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country’s debt.
After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package at the 11th-hour that averted a possible default.
In its statement, S&P said that it had changed its view “of the difficulties of bridging the gulf between the political parties” over a credible deficit reduction plan.
S&P said it was now “pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics anytime soon.”
Despite Dow ending the day up, it was a roller coaster all day at one point down 170 points. With the S&P downgrade, the release of the jobs report, and the roller coaster week on Wall Street, many are just holding their breath to see how the markets flesh out.
Daniel J. Mitchell is a senior fellow at the Cato Institute, a libertarian think tank based in Washington.
Added to cato.org on August 2, 2011
This article appeared on CNN.com on August 2, 2011.
America is on a path to becoming a Greek-style welfare state. Thanks to the Bush-Obama spending binge, the burden of federal spending has climbed to about 25% of national economic output, up from only 18.2% of GDP when Bill Clinton left office.
But that’s just the tip of the iceberg. Because of a combination of demographic forces and poorly designed entitlement programs, federal spending could consume as much as 50% of economic output by the time the baby boom generation is fully retired.
One symptom of all this excessive spending is that Washington is awash in red ink. We’re now in our third consecutive year of trillion-dollar deficits and the politicians just had to increase the nation’s $14.3 trillion debt limit.
Daniel J. Mitchell is a senior fellow at the Cato Institute, a libertarian think tank based in Washington.
But it wasn’t easy getting there. Just as happened with the “government shutdown” debate in March, Republicans and Democrats had fierce disagreements over the right approach. They bickered until the last minute and then finally agreed to more than $900 billion of supposed spending cuts and the creation of a “supercommittee” charged with proposing another $1.5 trillion of deficit reduction.
So which side won this fight? Republicans are bragging that they got spending cuts today, a promise of spending cuts in the future, and no tax increases. Democrats, meanwhile, are chortling that they took the debt issue off the table until after the 2012 elections, protected their favorite programs and created a supercommittee that will seduce the GOP into a tax increase.
Ignore that bragging. The easy answer is that politicians of both parties were the victors and taxpayers are the ones left in the cold.
In other words, the budget deal was a victory for the political establishment.
Here’s why Republicans are winners. They get to tell their tea party activists that they forced Obama to cut spending. It doesn’t matter that federal spending will actually be higher every year and that the cuts were based on Washington math (a spending increase becomes a spending cut if outlays don’t climb as fast as some artificial benchmark).
They also get to tell their anti-tax activists that they held the line. Perhaps most important, the supercommittee must use the “current law” baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the supercommittee therefore can’t use repeal of the “Bush tax cuts for the rich” as a revenue raiser.
This means that most Republican incumbents are well-positioned to win re-election.
Here’s why Democrats are winners. Thanks to the magic of government math, despite all the talk of budget cuts, discretionary spending will be more than $100 billion higher in 2021 than it is this year. And since defense spending in Iraq and Afghanistan presumably is winding down, this means even more money will be available for domestic programs.
In addition to telling the pro-spending lobbies that the gravy train is still on the tracks, they also get to tell the class-warfare crowd that there’s an improved likelihood of higher taxes for corporate jet owners and other “rich” people. Notwithstanding GOP assertions, nothing in the agreement precludes the supercommittee from meeting its $1.5 trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table.
This means that most Democratic incumbents are well-positioned to win re-election.
It’s worth pointing out that this doesn’t mean all Republicans and all Democrats are happy about the deal. The hard-core conservatives are upset that the deal is mostly smoke and mirrors on the spending side and that there may be a tax-increase trap on the revenue side.
The hard-core liberals, by contrast, are angry that there are any spending cuts, even ones based on Washington math. Moreover, they want higher tax rates on upper-income taxpayers today, not a supercommittee that may or may not follow through on soak-the-rich policies in the future.
One group of people, however, unambiguously got the short end of the stick in this budget deal. Ordinary Americans are caught in the middle. They’re not poor enough to benefit from the federal government’s plethora of income-redistribution programs. But they’re not rich enough to have the clever lobbyists and insider connections needed to benefit from the high-dollar handouts like ethanol subsidies and bank bailouts.
Instead, middle-class Americans play by the rules, pay ever-higher taxes, and struggle to make ends meet while the establishment of both parties engages in posturing as America slowly drifts toward a Greek-style fiscal meltdown.
The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 3)
Will Rogers has a great quote that I love. He noted, “Lord, the money we do spend on Government and it’s not one bit better than the government we got for one-third the money twenty years ago”(Paula McSpadden Love,The Will Rogers Book,(1972) p. 20.)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Republican Congressman Jeff Flake, who represents Arizona’s Sixth District, today voted against the revised version of the Budget Control Act of 2011.
“I don’t think that this deal takes into account the severity of the budget crisis we face. The age-old trick in Washington is to produce a ten-year budget with serious cuts only taking effect in later years. This deal continues that practice. Additionally, the requirement for a balanced budget amendment, which was included in the Boehner bill, was excluded from the final legislation.”
Congressman Flake: So Just How Broke Are We?
Mesa, Arizona, Aug 2 – Republican Congressman Jeff Flake, who represents Arizona’s Sixth District, today illustrated the size and scope of the growing national debt. The Washington Times reports that Vice President Joe Biden collects rent from the Secret Service for use of a cottage on a property he owns in a Wilmington, Delaware suburb. The Secret Service pays the vice president $2,200 each month in rent.
The U.S. is so broke that Vice President Biden would have to rent his cottage to the Secret Service for 545.8 million years – long after he’s left office – to have the money to pay down our debt of more than $14.4 trillion.
“Biden’ our time clearly isn’t solving the debt problem,” said Flake.
Along with Senators McCain and Rubio, Congressman Flake introduced in the 112th Congress the Debt Buy-Down Act, which allows taxpayers to designate up to 10 percent of their federal income tax liability to reduce the national debt. The bill then requires Congress to reduce federal spending by that amount. More information on the Debt Buy-Down Act can be found here.
If our country is at a crisis point with this huge federal deficit, why can’t we freeze spending until we get it under control? Below is a good proposal.
Now that the national debt ceiling deal is done — and liberals like me are unhappy and conservatives deservedly have more to cheer about — Thanksgiving 2011 will be more than about good turkeys. This is the deadline for the so-called “super” congressional committee of six Democrats and six Republicans from the House and Senate to cut at least $1.2 trillion in the projected budget deficit for the next 10 years.
I favor at least one-half of this $1.2 trillion to be funded by a combination of tax reform – closing tax loopholes — and increases in marginal tax rates of upper income taxpayers (including me).
But if you are an anti-tax conservative who sincerely believes that you have to cut spending and not “feed the beast” with more revenues, then one approach on spending cuts for the super committee to consider is the simple and creative “Penny Plan” introduced by Rep. Connie Mack (R.-Fla.).
Mr. Mack’s bill, H.R. 1848, would cut one-penny-out-of-every dollar actually spent by the federal government from year-to-year for the next six years, from FY 2012-FY 2017. Beginning in FY 2018, there would be a budget cap of 18% of GDP (the average federal revenue as a percentage of GDP over the past 30 years). And by FY 2019 America would finally have a balanced budget — that is, assuming revenues naturally increase from the current 14.8% of GDP to 18% of GDP by 2019, after which the budget would be in surplus.
There is an automatic spending cut “trigger” under Mr. Mack’s plan — one he came up with well before the trigger used in the recently passed national debt ceiling bill. If congress failed to enact a budget implementing the one-percent-actual-spending cut required under Mr. Mack’s measure, then there would be automatic, across-the-board actual cuts in all federal programs to meet the one percent reduction, and that means all: in defense, Social Security, Medicare, Food Stamps, defense and national security spending, everything.
Mr. Mack’s plan may seem draconian to some. It would cut the accumulated budget deficits by an estimated $7.5 trillion over ten years — more than three times the amount achieved by the debt ceiling deal congress approved last Tuesday.
But it actually has a rather modest impact on reducing our total national debt. It won’t be until 8 years from now that the budget will be in balance and the national debt starts getting paid down.
We had $1 trillion in surplus — money in the bank — when Bill Clinton left office on January 20, 2001, just eight years after he began his presidency inheriting a $300 billion deficit. Now we are heading towards a $15 trillion debt. How did this happen? Both parties are guilty.
I am a liberal Democrat who believes that the national debt and annual deficits are the country’s greatest moral issues. We cannot continue to use credit cards to pay for wars, corporate jet write-offs, and Social Security and Medicare — and leave it to our children, grand-children, and probably great grand-children to pay our bills.
That is simply wrong. It is a moral stain on our generation if we leave this red-ink legacy for generations to come to deal with.
Mr. Mack’s Penny Plan may be imbalanced from my perspective, lacking in the revenue-raising component endorsed by the bipartisan Gang of Six and the Simpson-Bowles commission. I believe Republicans will have difficulty in the 2012 congressional and presidential elections defending the proposition that the national debt can be significantly paid down from budget cuts alone, or that the wealthier in our society shouldn’t pay more or at least stop taking advantage of tax loopholes to pay less.
But since the “balanced” solution of both increased revenues and spending cuts entitlement reform is supported in virtually ever poll by substantial majorities of all voters, including large numbers of Republicans, Democrats need to find a spending cut formula that they can live with. The Mack Penny Plan seems a good place to start — it is simple, it makes common sense, and with some adjustments protecting the poor and the unemployed, it could be seen as fair even to many of the most liberal Democrats.
Despite our philosophical differences, I am a great admirer of Rep. Mack. I respect his deeply felt conservative philosophy and values. Most of all I respect his ability to disagree agreeably.
In this time of crisis — and I believe our national debt is a genuine and historic crisis — we need members like Mr. Mack who know how to reach across the aisle, as I have seen him do many times, to find common solutions. The Mack Penny Plan deserves serious consideration – as serious as the man who proposed it. Mr. Davis has served as a lobbyist representing the government of Honduras and the Honduran business council and in that capacity met with Rep. Mack, who was Ranking Member and then Chairman of the Subcommittee on Western Hemisphere Affairs, on many occasions.
Mr. Davis is the principal in the Washington D.C. law firm of Lanny J. Davis & Associates, which specializes in strategic crisis management. He served as President Clinton’s Special Counsel in 1996-98 and as a member of President Bush’s Privacy and Civil Liberties Oversight Board in 2006-07. He is the author of “Scandal: How ‘Gotcha’ Politics Is Destroying America” (Palgrave Macmillan, 2006). He can be found on Facebook and Twitter (@LannyDavis).
This weekly blog appears in The Hill, Foxnews.com, Huffington Post and the Jakarta Globe every Thursday.
“What good is a debt limit that is always increased?”
The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 2)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
WASHINGTON—U.S. Rep. Martha Roby (AL-02), a member of the House Committee on Armed Services, made the following comments today regarding the House of Representative’s vote to increase the statutory limit on the national debt:
“I applaud the efforts of Speaker Boehner, Majority Leader Cantor, Majority Whip McCarthy, and Budget Chairman Ryan over the last month. Every dollar saved under the plan approved tonight is a result of their steadfast advocacy on behalf of the American People. While the final legislation is far from perfect and while many of us would prefer the more fundamental reforms found in the ‘Cut, Cap, and Balance Act,’ this compromise cuts a dollar of spending for every new dollar of debt. That is a significant accomplishment given that Democrats—who wanted new taxes and no spending reductions—outnumbered Republicans two to one at the negotiating table.
“During this debate, I voted for two separate proposals that would significantly cut future spending, put our nation on firmer financial footing, and avoid a potentially catastrophic default. Each was killed by Senate Democrats.
“I am pleased that a default has been avoided as a result of the vote tonight. However, I was unable to support this legislation because, after a careful reading of the bill, I fear it could ultimately result in devastating and unjustified cuts to our national security. This bill, unlike previous proposals I supported, has a weak firewall against potentially destructive defense cuts. To be sure, there are savings to be found in the Pentagon’s budget, and I have already voted this year to trim wasteful and unnecessary defense spending. But this bill goes much too far. The legislation would use our defense budget as an insurance policy to guarantee savings in the event that the special joint committee, which this legislation creates, fails to achieve cuts in other areas of the government bureaucracy.
“Of course we lack a crystal ball to know how it will play out, but my best judgment is that the chances the special joint committee will fail are too high to risk our national defense, which is one of few legitimate government functions enumerated in the Constitution. If required, the cuts would be so deep as to affect the readiness of our troops around the world—a risk I am not willing to take. As important as deficit reduction is, what good is it for a country that is unable to adequately defend the freedom and liberty it cherishes? Certainly there are other places in the massive federal bureaucracy that are more deserving of deep cuts.
“I reject the idea that we need not worry about these cuts because Washington will never let them happen. To make that suggestion is to say that the legislation does not actually do what we have said it does.
“In the end, I hope that the special joint committee will find the spending cuts that it is charged to identify, and I look forward to reviewing the product of its work. Our prayer is that the special joint committee members will do their jobs, thereby ensuring that the damaging military cuts that could occur never see the light of day.
“On the broader question of restoring fiscal responsibility, our work has just begun. This has been a long and convoluted process, but the takeaway is simple: in a short period of time, House Republicans have successfully changed the conversation in Washington from ‘how do we spend more’ to ‘how do we spend less.’ Even so, much work remains, and only a sustained, dedicated effort will truly change the spending culture in Washington.”
# # #
NOTE: Congress debated how best to raise the debt limit for many months. Members considered numerous proposals, and the House of Representatives and the Senate each took several votes on the issue. On May 31, Rep. Martha Roby voted against President Obama’s original request for a clean debtincrease that would expand the government’s ability to borrow money without placing any restrictions on future spending. She saidthat any debt limit increase should be accompanied by “significant” spending cuts. On July 22, Roby voted in favor of the “Cut, Cap, and Balance Act,” referringto the “strong” measure as her “preference.” The Democratic Senaterejected the measure. With the debt deadline looming, Roby supported Speaker Boehner’sproposal on July 29, notingthat it was “far from perfect” but that it cut a dollar of spending for every dollar of additional debt and included no new taxes. Again, the Senaterejected that measure. On July 28, Roby opposed Sen. Reid’s proposal, which she pointed outincluded an unacceptable budget gimmick that would not result in real savings. (The Senatealso rejectedthe Reid proposal.) That vote was followed by the events described in the press release above.
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011. Rep. Brooks on Fox Business: BBA and the Debt Ceiling Vote
Washington, D.C. – Today Congressman Mo Brooks (R-AL) made the following statement concerning his vote on the Budget Control Act of 2011:
Summary
The Obama-Reid-Boehner Debt Ceiling Bill is bad for America, bad political process, bad for national defense, does not prevent unsustainable budget deficits, kicks the debt ceiling crises down the road to 2013 (when America will have more debt and less financial strength with which to fix the problem), and fails to satisfactorily decrease the risk of an American credit rating downgrade.
Overview
America must, and will, raise the debt ceiling. The question is not whether Congress will raise the debt ceiling; the question is when and how. Regardless of when the debt ceiling is raised, every bill and obligation of America to its citizens and creditors will be paid in full (albeit, with the exception of creditors, some payments may be delayed).
I have voted to raise the debt ceiling provided the debt ceiling bill makes America’s financial condition better, not worse.
I voted to raise the debt ceiling on July 22, 2011, when I voted for the Cut, Cap and Balance Plan (cutting FY 2012 expenditures by a modest $111 billion in the context of a $1.5 trillion deficit; capping federal government expenditures within historically justifiable 18-20% ranges; and passing a Balanced Budget Constitutional Amendment that protect future generations of Americans from revisiting the financial mess we face).
I voted to raise the debt ceiling on July 29, 2011, when I voted for the Boehner Plan (which included a Balanced Budget Constitutional Amendment requirement).
I will not vote for the Obama-Reid-Boehner Debt Bill (herein the “Debt Bill”) because it is not up to the financial challenges America faces.
Background: The Problem
Years of spending binges by the federal government have come home to roost. America’s debt exceeds $14 trillion. America has suffered three consecutive years of trillion dollar deficits (and faces trillion dollar deficits into the foreseeable future).
Annual deficits and accumulated debt force America to confront two major financial threats, both with one common cause: unsustainable budget deficits.
In the short term, America faces a debt ceiling crisis. Over the longer term, America faces a debt crisis.
If trillion dollar deficits continue indefinitely, America’s insolvency and bankruptcy is certain, thereby risking America’s national defense, Social Security, Medicare, Medicaid, NASA, and everything else the federal government does.
Debt Bill Deficiencies That Compel a “No” Vote
The accumulative deficiencies in the Debt Bill compel me to vote “No.” The deficiencies are:
1. Minimal Time for Consideration and Deliberation.
The Debt Bill is 74 pages of interwoven, complicated legal and budgetary terms. I have read and studied the Debt Bill in the limited time available. The Debt Bill forces onto our children and grandchildren another $2.4 trillion in debt burden, yet we are expected to vote on it with less than 24 hours notice.
This is insufficient time to thoroughly understand the Debt Bill’s nuances, for budget experts to digest the Debt Bill and offer their insights, for the public to analyze the legislation and share their insight, and for Congress to make a wise and deliberative decision.
While some argue the Debt Bill must pass by the White House’s August 2 deadline; I believe it is better to act wisely than in haste. The economy will be much worse if Congress, in haste, makes a $2.4 trillion error.
2. Significant Defense Cuts in FY 2012 & 2013.
In FY 2012, the Debt Bill cuts national defense by $2 to $17 billion (the variance is due to different Debt Bill interpretations by the House Armed Services Committee).
The Debt Bill creates a 12-member Joint Select Committee (six Senators and six Congressmen; six Republicans and six Democrats). By November 23, the Committee must recommend $1.2 trillion in deficit reduction measures (spending cuts and/or tax increases). If the Committee makes a recommendation, Congress must vote on the recommendation on or before January 15.
If the Committee splits 6-6 and makes no recommendation, or if either House of Congress rejects the Committee’s recommendation, then the Debt Bill mandates that the Defense budget be cut $60 Billion in FY 2013 (i.e. – in the fiscal year beginning 14 months from now, on October 1, 2013).
National defense is the top priority of the federal government. If the Debt Bill passes, there is an unnecessary and substantial risk that it will trigger risky defense cuts in just 14 months that undermine the defense capabilities of America.
3. The Bill Does Not Fix the Underlying Problem.
The Bill makes America’s financial challenges worse by inadequately addressing unsustainable deficits that threaten America with insolvency and bankruptcy and force debt ceiling increases.
The Debt Bill’s “cuts” bind no future Congresses. Hence, the only “cuts” that count are those for Fiscal Years 2012 and 2013.
In FY 2012, the Debt Bill cuts discretionary federal government spending by only $7 billion (versus FY 2011 levels), while overall federal government spending actually increases (“discretionary spending” is less than 30% of total federal government spending).
In FY 2013, the Debt Bill increases discretionary federal government spending by $4 billion (over FY 2012 levels). Overall federal government spending again increases significantly.
Hence, in both FY 2012 and 2013, the federal government deficit is estimated to exceed $1 trillion/year if the Debt Bill passes and, under the best of scenarios, the Debt Bill’s “solution” increases America’s debt by $2.4 trillion in less than two years, which makes America’s debt problem much worse, not better.
4. Balanced Budget Constitutional Amendment.
The Debt Bill requires a vote of Congress on a Balanced Budget Constitutional Amendment but does not require that Congress pass a Balanced Budget Amendment.
The July 29 Boehner Bill required passage of a Balanced Budget Amendment before the Phase II debt ceiling increase would occur. The Debt Bill eliminates the requirement for a Balanced Budget Amendment, thereby eliminating the only long-term fix to America’s unsustainable deficits.
5. Punting the Debt Ceiling Crisis to 2013.
Because of 2012 election considerations, the Debt Bill “kicks the can down the road” to 2013, when a financially weaker America will be less capable of facing yet another debt ceiling crisis.
America will be weaker because debt service burdens will be $2.4 trillion more and the total debt of $16.7 trillion will likely be subject to higher interest rates and more onerous payment obligations.
America must face its unsustainable deficit issue while it is stronger, not weaker. The longer America waits, the worse the economic outcome will be.
6. Credit Rating Cuts.
In my judgment, the Debt Bill substantially increases the long-term risk of a cut in America’s credit rating.
Standard & Poor stated on July 14, 2011, that America’s credit rating is at risk if Washington has “not achieved a credible solution to the rising U.S. government debt burden and [is] not likely to achieve one in the foreseeable future.” Standard & Poor president Deven Sharma reiterated this concern on July 27, 2011 when he testified before the House Financial Services Committee that, “The more important issue is really the long-term growth rate of the debt… that is the more important issue at hand.”
Similarly, Moody’s stated on July 13, 2011 that, if the debt ceiling is raised, America’s credit rating outlook “would very likely be changed to negative… unless [there is a] substantial and credible agreement [on] long-term deficit reduction.”
The Debt Bill does not cut America’s short or long-term deficits enough to minimize the risk of downgrade in America’s credit rating… a downgrade that will, in turn, drive up America’s debt service cost and reduce funding for all other federal government programs. To make matters worse, if America’s interest rates go up; state, local and private interest rates are likely to also go up… thereby hurting all Americans at every level.
The Solution
The best solution that protects America from the short term debt ceiling and long term insolvency threats is a debt ceiling increase coupled with a Balanced Budget Constitutional Amendment that is phased in over a 5 year period.
Inasmuch as constitutional amendments often take years to pass, time that America may not have, the debt ceiling should be raised in a two-step process. The first step partially raises the debt ceiling when Congress passes a substantive and effective Balanced Budget Amendment. If the Senate and House concur, this can be done in as little as a week.
The second step raises the rest of the debt ceiling requirement when the states ratify the proposed Balanced Budget Amendment. This process gives the states an incentive to ratify the Balanced Budget Amendment in less than one year (or trigger the effects of not raising the debt ceiling).
Discretionary Spending Cuts Alone Are Not an Adequate Substitute for Entitlement Reform
Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.
Annual spending on entitlement programs is massive compared to other federal spending priorities. Cutting discretionary spending is a necessary step, but cuts to foreign aid alone or pulling out of Afghanistan will not close the deficit. Entitlement spending must be reined in.
ANNUAL SPENDING (2011)
Download
Source: White House Office of Management and Budget.
The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More
Authors
Emily GoffResearch Assistant
Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor
The point is that we don’t need to choke our government — or, more to the point, ourselves — with such simplistic devices as balanced budget amendments. The point is that we need to make our often-essential deficit and debt more sustainable, more manageable, more responsible and less massive, and that we should do that by addressing both income and outgo.
You’re right, my tea party friend, about how government must change its ways. You’re not right, though, in the over-simplicity of your assessment or in the impractical, even drastic, nature of your remedies.
Brummett’s view used to be the majority view, but in a recent poll by CNN over 70% now favor a Balanced Budget Amendment. I am starting a series today on the Balanced Budget Amendment!!!
Dear Senator Pryor,
Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).
On my blog www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, I did not see any of them in the recent debt deal that Congress adopted. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend.
You are right to ask for ideas to cut spending because that is the real cause of the deficit. John Stossel rightly noted, “Milton Friedman always said taxes don’t tell the whole story. What counts is how much of our resources government spends, however it acquires them. The doubling of spending under Bush and Obama hasn’t gotten enough attention.”
Senator Pryor, you asked for spending cut advice. Here is some from John Stossel:
It’s not hard to balance the budget. On my show, we made enough cuts to create a $237 billion surplus. I cut whole departments, like Education and Commerce. I cut two-thirds of the Defense Department (which still leaves it much bigger than China’s). I indexed Medicare, Medicaid and Social Security to inflation, raised the retirement age, and took away benefits for rich people. But I don’t have to run for office. Congressmen do, and they can’t even manage to cut ridiculous tax breaks like those for ethanol.
The political class predicted “disaster” if Congress didn’t raise its debt limit.
I think that was a scam to get more money. See, the poor politicians don’t have enough, and they need to borrow more. We taxpayers are cheap. This year we’ll give them only $2.2 trillion. They want to spend $3.8 trillion.
The president said if he didn’t get more money, Social Security checks wouldn’t go out. Why not?
With $2 trillion, they can pay Social Security, Medicare, the interest on the debt and still have billions left. It’s billions more than the government spent when President George W. Bush took office. What’s the problem?
The problem is that Republicans and Democrats under Bush and President Obama doubled spending. Now, Obama wants more taxes.
Taxes shouldn’t be the answer when spending is the problem.
Grover Norquist, who heads Americans for Tax Reform (ATR), leads the charge to keep the focus on spending. Norquist and ATR are famous for asking officeholders and candidates to sign a pledge not to raise taxes. Some say he is the reason the debt-ceiling debate was so drawn out.
“I think the reason there isn’t a tax increase on the table,” he told me, “is that 235 members of the House of Representatives signed a pledge never to raise taxes, a pledge to their voters, and 41 senators did. …
“Only if you take tax increases off the table do you even begin to … focus on spending, and that’s what Obama wants to keep our focus off of. He wants us to talk about the deficit, not spending.”
I pointed out that Obama might have scored points with the public because new revenues he sought — even though they wouldn’t do much to shrink the deficit — would come from closing unpopular tax “loopholes.”
Norquist said he favors that — if tax rates are lowered at the same time.
“(We) want to simplify the code,” he said. “(We) want to take a lot of the goodies that politicians have laced into that code … as long as you reduce tax rates and it’s not a hidden tax increase.”
Milton Friedman always said taxes don’t tell the whole story. What counts is how much of our resources government spends, however it acquires them. The doubling of spending under Bush and Obama hasn’t gotten enough attention.
“We need to ask what it is government should do,” Norquist said. “But it’s going to be knockdown, drag-out. All government overspending creates the constituency for its own perpetuation. … Weaning people off, that is very difficult.”
He’s right. When politicians make little cuts in the rate of spending growth, every interest group mobilizes to protect its little piece of the pie. That’s why you must cut government like you take off a Band-Aid: quickly and all at once.
It’s not hard to balance the budget. On my show, we made enough cuts to create a $237 billion surplus. I cut whole departments, like Education and Commerce. I cut two-thirds of the Defense Department (which still leaves it much bigger than China’s). I indexed Medicare, Medicaid and Social Security to inflation, raised the retirement age, and took away benefits for rich people. But I don’t have to run for office. Congressmen do, and they can’t even manage to cut ridiculous tax breaks like those for ethanol.
Obama predicted disaster if the debt ceiling wasn’t raised. Some predict disaster if the ratings agencies downgrade Treasury bonds. I’m dubious. In 1995, President Clinton and Republican Congress couldn’t agree on a budget, so the government shut down twice, the second time for three weeks.
Did the economy grind to a halt? No. During the first shutdown, the stock market went up. During the second, it dropped then recovered.
The alarmists screamed that the fight over the debt ceiling would discourage lenders. Wrong. Ten-year Treasury bonds sold for a measly 3 percent interest (versus 15 percent in 1981).
I wasn’t worried that Congress would fail to raise the debt ceiling. But I am worried that Congress will keep spending.
John Stossel
John Stossel is host of “Stossel” on the Fox Business Network. He’s the author of “Give Me a Break” and of “Myth, Lies, and Downright Stupidity.” To find out more about John Stossel, visit his site at johnstossel.com.
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