The Time for Posturing is Over
Weeks of increasingly contentious debate over the looming debt ceiling deadline have brought Congress and the White House to deadlock. Congressional Republicans believe that unprecedented levels of federal spending should be reduced to move from this year’s $1.4 trillion deficit to a balanced federal budget. The President and Congressional Democrats insist that higher taxes are needed to make current government spending levels permanent.
The House of Representatives recently approved the “Cut, Cap, and Balance” bill to make needed cuts in federal spending and lock in a balanced budget permanently. I strongly support and voted for this legislation when it came before the Senate. Unfortunately, the Democrat majority in the Senate voted it down - bolstered by President Obama’s promise to veto the legislation if it reached his desk.
Some positive proposals emerged recently from a bipartisan group of U.S. Senators known as the “Gang of 6.” The “Gang of 6” released a six-page deficit reduction plan that has pieces that could contribute to a solution and avoid the disastrous consequences of a U.S. default on its $14.3 trillion accumulated debt.
The “Gang of 6” proposal lacks many important details that would need to be added for Congress to take action. But it outlines a combination of provisions that could be the basis for achieving the goal of a balanced budget: deep spending cuts, entitlement program reform, and a pro-growth overhaul of the U.S. tax code. The plan’s tax provisions include lower individual income tax rates for all taxpayers and repealing the Alternative Minimum Tax that will force taxes higher for 30 million people this year.
Balancing the federal budget and halting our $14.3 national debt are the crucial issues upon which hinges both the short and long-term fate of our economy. Uncertainty about job-killing taxes and the looming Obama Health Care reform along with unsustainable federal deficits are causing our businesses to delay hiring. Economic recovery and America’s future security and prosperity will ultimately be determined by our ability to focus and deliver on deficit reduction and pro-growth tax policies.
Among the many problems that will arise if America stays on its current path of reckless, unstable deficit spending is that the longer we delay, the closer we come to risking the loss of our triple “A” credit rating. Why does that matter?
In addition to destabilizing financial markets, interest rates for all types of borrowing would rise, including mortgages, credit cards, and new business borrowing for job creation. A U.S. default on its debt would, for the first time ever, call into question the stability of the U.S. dollar. In addition to global financial disruption, prices for virtually all of the goods and services we import - starting with the already high price of gasoline - could skyrocket. And the interest rate on trillions of accumulated government debt would rise, too, making an already dire fiscal situation worse.
There is still time to avert these possible consequences, and ensure our country’s long-range economic and national security. But there is no time to lose. Unless the debt ceiling crisis is resolved with a sound plan to cut spending and get to a balanced budget, serious problems will start sometime next month.
We can’t compromise on important principles. But it won’t be easy to reach agreement between the Democrats in control of the White House and the Senate, and Republicans in control of the House.
The “Gang of 6” plan has major concepts to both upholding our principles and breaking the deadlock. Elements of the Cut, Cap, and Balance plan also should be part of a plan. But the time for posturing is over. We in Congress must roll up our sleeves and do the job we were elected to do: put our country’s financial affairs in order, keep the government’s hands out of our pocketbooks, and ensure economic opportunity for all Americans.