The
2011 Debt Limit debate and fiscal responsibility
Thoughts from Edwin Feulner —
My fellow conservatives,
Americans are disappointed. They are disappointed that the debate over our debt limit was about the needs of politicians instead of the needs of the country. They are disappointed with a broken government that refuses to fix itself. And they are disappointed that the Budget Control Act that passed the House last night and is likely to pass the Senate today does not make the transformative changes this nation requires.
There are several elements of this plan that are simply unacceptable, even when framed inside the narrow political confines that limited a better outcome (i.e., the White House and Senate are still controlled by spend-tax-and-borrow liberals).
No AAA Reassurance: This plan is insufficient to protect our nation’s AAA credit rating. On Friday, Moody’s stated that neither the Boehner nor Reid proposals would restore our solid credit footing. This plan did not improve upon those. Economists from Barclays Capital in London said of the deal: “Overall, our first impression is that the agreement by itself is unlikely to be sufficient to cause S&P to remove the U.S. from being on ratings watch for possible downgrade.” Ajay Rajadhyaksha, head of U.S. fixed-income strategy at Barclays, was blunter: “The chances of a downgrade after this deal remain substantially high.”
Irresponsible Defense Cuts: There are two rounds of defense cuts that risk our national security. If all are imposed, we will have a trillion dollars less than we need to protect our nation and defend its interests. Despite increased risks from Iran and North Korea and ongoing wars in Afghanistan, Iraq, and Libya, this deal further cripples a defense budget already sized for peacetime and ignores the real problemrunaway entitlement spending.
More Tax Hikes: Yesterday, White House officials took to the airwaves to assure their liberal base that the new “special” committee would recommend tax hikes. This is one White House assurance you can take to the bank. This deal sets the conditions for a massive tax increase from expiring lower rates and committee horse-trading. Even President Obama agreed in December 2010 that raising taxes to discourage job-creating investments in the middle of a recession was a bad idea. It’s still a bad idea.
An Unclear Balanced Budget Approach: Conservatives are united behind the idea that Congress should balance its budget year-in and year-out, but the devil is in the details. The debt limit deal is a missed opportunity to drive spending down toward a balanced budget. Moreover, the debt limit deal does little to advance the cause of a balanced budget amendment to the Constitution. Not all balanced budget amendments are created equal. We need an amendment with proper taxpayer protections so that Congress can’t simply hike taxes to balance the budget.
Punting Responsibility: The American people don’t send politicians to Washington in order to appoint special committees and duck responsibility. They must make tough choices to reform entitlements. We’ve had enough commissions be ignored. This half-Democrat, half-Republican committee will probably deadlock, too (or worse, push a tax hike), so we’ll get little out of it.
These are just some of the problems identified in the $2.5 trillion debt deal. There are others.
Conservatives put up a good fight for the non-defense spending cuts needed to reduce the size and cost of government. While Senate Democrats sat on their hands for 800-plus days, doing nothing, House conservatives introduced and passed the Ryan budget plan and the Cut, Cap, and Balance Act, each of which was a step in the right direction.
The debt limit deal is a disappointment, but conservatives have made a real difference. We can be proud of the progress we made changing the dialogue in Washington. Just as with the Ryan budget plan, we are talking in terms of spending cuts for a smaller, less costly government, not spending increases. Popular opinion is with the conservative philosophy of limited government.
But this debt increase was the highest in history. This is not surprising, given the record spending increases and deficits we’ve witnessed over the past two years. We cannot maintain this course and keep our creditworthiness or create jobs and economic growth.
Given the framework we are now living under, and the water that has passed under the proverbial bridge, it is now up to conservatives to:
Pursue Entitlement Reform: Social Security is operating in the red and faces a long-term deficit of nearly $8 trillion. Medicare is the most costly, and least efficient, federal program. Obamacare is simply an abomination that must be repealed. Congress must move to make significant reforms to entitlement programs. We can no longer accept weak recommendations and a lack of political courage. There can be no more budget-related debates in Washington that ignore this looming and preventable crisis.
Pursue Revenue-Neutral Tax Reform: The current tax system is too complex and penalizes productive work. Lawmakers see job creators and entrepreneurs as easy targets to soak so that they can spend more. It’s a terrible cycle that is costly to our economy. The committee set up by the debt framework should take up tax “reform” rather than simply tax “hikes.” Creating a simple, flatter system that protects low-income workers, encourages investment, and fuels business growth would be a major step on the road to economic recovery.
Maintain a Strong Military to Defend America: With nearly a trillion dollars in cuts to our military on the table during a period of heightened risk and global operations, it is imperative that Congress ensure that these cuts do not eliminate badly needed resources for our fighting men and women and that they have the best equipment and technology to keep America safe. As Heritage Vice President Kim Holmes stated: “America is different from other countries for a lot of reasons, but surely one of the biggest is that we are masters of our fate. We are fortunate to have an armed force that not only defends us but keeps us from being at the mercy of other countries, many of whom wish us ill.”
Get Serious About Spending and Regulation: Washington has a unique way of taking one step forward and three steps back. We must remain vigilant about preventing new spending and regulations that hinder economic growth, stifle job creation, and grow the federal government.
To drive spending down toward a balanced budget, reduce the share of the economy devoted to public debt, preserve America’s ability to protect the nation, and shift to a job-creating tax system without raising taxes, The Heritage Foundation has published “Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity.” The Heritage plan does what Congress should have done and failed to do. Conservatives: Continue to fight for what is right for America.
Onward!
Edwin J. Feulner
President, The Heritage Foundation
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