Budget

Op-Ed: "Congress Leaving on a Debt Plane"

The Hill | September 18, 2012

Members of Congress will return home for yet another recess in the next few days, leaving behind nothing but a swirl of rumors about how they plan to address America’s major fiscal issues.  

Until now, lawmakers seem to have held out hope that voters aren’t paying attention to the particulars of the “fiscal cliff” and America’s out-of-control national debt. Neither party revealed specific plans for dealing with these challenges at their recent political conventions, or since. New stories appear each day in the political press suggesting that lawmakers are preparing to once again punt on the tough choices required to address our looming fiscal crisis.

All of this is status quo political maneuvering. But there are two major reasons to believe that it won’t fly this time around. The writing on the wall about the implications of inaction is getting too bright to ignore, and a well-resourced, national, bipartisan campaign has been launched to take the issues straight to the voters in lawmakers' districts.

Alarm bells about the fiscal cliff are going off with increasing frequency. Last week, Moody’s Investor Service, the major ratings agency, warned that the U.S. could lose its sterling credit rating if Congress doesn’t reach a deal to replace the abrupt, mandatory spending cuts and tax increases that are set to take effect in January with a plan to stabilize and ultimately reduce the debt as a percentage of GDP. A ‘kick-the-can’ solution that simply delays the abrupt tax increases and automatic spending cuts for a few months would leave this uncertainty hanging over an already struggling economy.

Business leaders are also weighing in about the urgency of action. As the New York Times reported last month, “A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months.”

It would be a mistake for policymakers to take these cues as a reason to simply institute a short-term fix that avoids the fiscal cliff and tees up another crisis next year. The fiscal cliff is simply a curtain raiser on the bigger issues we will likely face with the debt, including rising inflation, dollar devaluation, disappearing resources for public works, and a growing dependency on China. What we need is to replace the fiscal cliff with a long-term, bipartisan deal on the national debt that alleviates economic uncertainty and increases confidence that our leaders are up to the task of addressing the greatest fiscal challenge of our lifetime. 

This message is starting to be heard more loudly and more clearly across the country. Great credit for the increased awareness is due to dedicated advocates such as former Senator Al Simpson (R-Wyo.) and former Clinton White House Chief of Staff Erskine Bowles, who championed the idea of an “everything on the table” approach and co-founded the Campaign to Fix the Debt.

Senator Simpson and Mr. Bowles, along with former Republican Senator Judd Gregg and former Democratic Governor Ed Rendell, the Campaign co-chairs, have announced that the effort has raised almost $30 million dollars in just over a month, with more coming in, to educate voters and mobilize them to urge lawmakers to get a debt deal done. The Campaign is employing all the tools of modern political outreach, including advocacy in many states and major advertising, media and online programs. 

Already, nearly 140,000 concerned citizens across the country have signed the Fix the Debt petition. A growing number of CEOs and current and former public officials also have signed on to support the campaign at the national and local levels. 

With this broad bipartisan backing, we hope to increase the noise and heat on the debt issue, in order to urge policymakers to reach a deal based on key principles. Legislation addressing the spending and revenue elements of the fiscal cliff needs to be accompanied by concrete steps toward a long-term debt reduction plan that is credible to the public and to domestic and international financial markets. 

Such a plan must be bipartisan and comprehensive, addressing all parts of the budget, including cuts in low-priority spending, reforms of entitlement programs to reduce the growth of health care entitlements and make Social Security financially sound, and pro-growth tax reform which broadens the base, lowers rates, raises revenues, and reduces the deficit. It must also be large enough to stabilize and ultimately reduce the debt, but be implemented gradually to protect the fragile economic recovery and to give Americans time to prepare for the changes in the federal budget. Lastly, the plan should be conducive to long-term economic growth, protect the vulnerable, include credible enforcement mechanisms to ensure that the promised deficit reduction is achieved, and leave the next generation better off.

We are running out of time and rhetoric is of little value at this point. We need action. 

Op-Ed: Don't Delay Fencing Off the Fiscal Cliff

The Hill | September 11, 2012

Washington’s new pet solution to the “fiscal cliff” — the spending sequester and the expiration of tax cuts scheduled to collide in the first few days of January 2013 — is “let ’er rip.” In other words, let the tax cuts expire, let the spending cuts hit — we’ll clean up the mess later. It reminds us of Scarlett O’Hara’s “after all, tomorrow is another day.”

For each political party, this notion is predicated on an expected sweep — House, Senate and White House — in the November elections. The prevailing mindset is, “when we take control next January, even though it is after the scheduled train wreck, we’ll fix it all our way — and the other side can’t stop us.”

However, this gamble assumes the use of two legal, but economically and socially dangerous, mechanisms to circumvent the automatic tax increases and spending cuts. Mechanism 1: Even though the 2001 and 2003 tax cuts will expire on Jan. 1, the Treasury Secretary can simply leave income tax withholding unchanged, preventing taxpayers from immediately feeling the effect of elevated rates. Mechanism 2: The president’s budget director can continue to supply government agencies with cash in the same amounts that they would have without the sequester, delaying the spending reductions until later in the year. 

As the logic goes, if the incoming president and Congress can then change the law and undo the “fiscal cliff” in early 2013, the taxpayers and the federal agencies can just continue on that path laid out in January by the Treasury secretary and the budget director.

 But consider how perilous this high-stakes gambit really is. Both Republicans and Democrats agreed to the sequester’s automatic spending cuts because they knew that the federal government must cut its deficit by at least — and really much more than — the amount of those reductions. Since then, however, the president and Congress have avoided any action that truly lowers the future accumulation of debt. They cannot now simply continue to kick this fiscal hand grenade down the road; they cannot postpone budget savings forever. Temporary budgetary gimmicks provide no solution; they just put off January’s pain by risking much greater pain later in the year.

 And if either party does control the government, and does “let ’er rip,” action must follow early in the 113th Congress. We have watched extremely critical legislation fall apart in the thicket of congressional procedure, no matter how committed a majority of members might be. 

 A narrow congressional majority can disintegrate on a particular issue if a small faction within that majority realizes that it can demand a price for going along. If either party plays games with the expiring tax cuts and the sequester, and then its majority falls apart when it actually tries to change these laws, tens of millions of taxpayers will wind up under-withheld and owing big tax payments at the end of the year, and federal agencies will face massive furloughs to avoid overspending when their fiscal year ends. That will not only directly disrupt the economy and abruptly slash the take-home pay of millions of Americans, but it will also send a chilling signal throughout the world that the U.S. federal government cannot manage its own affairs.

Finally, if the election yields continued divided government, the “let ’er rip” tactic devolves into a potentially catastrophic game of chicken. Can the new government agree to undo the temporary mechanisms and provide at least an outline of a fiscally responsible plan before the taxpayers’ under-withholding and the agencies’ under-funding is exposed, and before markets implode because of all these shenanigans? If not, this will yield nothing but wreckage.

The president and Congress can avoid this wreck. Doing so will involve hard negotiations and a budget process that bridges the post-election lame-duck session and the 113th Congress. 

We have developed this process, which would force congressional committees in the House and Senate to meet savings targets established by the budget committees. We are well aware that Congress suffers from process fatigue after the failures of the past 18 months. But coming to grips with the need for another new budget process is just one more challenge that will have to be overcome if this nation is to remain exceptional.

We are not naive. Politics will be played. But the players must look ahead to the endgame before they bet the entire country — and that is what they will do if they continue to “let ’er rip.”

Op-Ed: "We Need Growth, and Growth Requires Reform"

The New York Times | August 29, 2012

Getting our economy growing is our most pressing economic problem. But there can be no sustainable economic growth as long as we face America’s enormous debt overhang. If we don’t put our nation’s fiscal house in order, we face the most predictable economic crisis in history.

Solving this economic crisis the right way means avoiding the large, immediate, indiscriminate cuts and tax increases that are on the horizon, from the “sequestration” deal.

We should be careful not to cut too deep too soon. But failing to deal with the debt is the real risk we just plain can’t afford.

One of the key principles set out by the National Commission on Fiscal Responsibility and Reform, which I co-chaired with former Senator Alan Simpson, was that a debt-reduction plan must be phased in gradually so as not to disrupt a very fragile economic recovery.

Our commission’s plan would reduce the deficit by more than $4 trillion over the next decade, but would do so in a way that encourages, rather than hinders, economic growth and stability.

The real short-term risk to the economy isn't a carefully thought-out deficit reduction plan, but the mindless spending cuts and tax increases — known as the “fiscal cliff” — that are scheduled to go into effect at the beginning of next year.

Allowing those deep and abrupt measures to occur would put us into a double-dip recession. At the same time, continuing on our current path by punting these measures would send a dangerous message to the markets that America is not willing or able to deal with our debt.

The only responsible course of action is to replace the fiscal cliff with a gradual and thoughtful plan to save at least $4 trillion over the next decade and put the deficit on a clear downward path relative to the economy.

Such a plan can lay the foundation for sustained economic growth through a combination of debt reduction, comprehensive tax reform, and maintenance of important investments in education, infrastructure, and high-value research and development.

We should be careful not to cut too deep too soon. But failing to deal with the debt is the real risk we just plain can’t afford.

Op-Ed: "A Problem Too Big for Small Solutions"

The New York Times | August 29, 2012

The federal debt is the nation’s most pressing economic problem because our dangerously high debt levels are a threat on every issue — be it jobs, growth, competitiveness or public under-investment. The deficit is already harming the economy, and could eventually lead to a devastating fiscal crisis.

To suggest we must decide between debt reduction and economic recovery is to present a false choice. To the contrary, we cannot achieve one without the other. The key will be to implement a comprehensive debt deal large enough to fix the problem, phased in gradually enough so as not to derail the recovery, and designed to promote economic growth through reforms to the tax code and cuts in government spending that protect productive government investments.

We must be willing to reform all parts of the budget, including health care, Social Security, defense and taxes.

The upcoming fiscal cliff will soon cause the moment of reckoning. If we hurdle ourselves off the cliff, doing too much deficit reduction, too fast, and in the wrong ways, we will plunge the nation back into recession; whereas if we punt, we will surely endure further downgrades and quite possibly frighten credit markets into no longer favoring the U.S.

Instead, we must be willing to use this moment as the first step of putting in place a comprehensive debt deal. We will have to be willing to reform all parts of the budget — including health care, Social Security, defense and taxes. Doing so would not only be good policy, but good politics. Already, more than 140,000 Americans have signed a petition called Fix the Debt, asking our leaders to pass a comprehensive debt plan.

Any plan will have to be bipartisan, because quite frankly this will be just too hard for either party to do alone. And if we let the presidential election deteriorate into political posturing, we will make the job of passing the needed reforms even harder. It’s not enough for the candidates to accuse each other of touching the budget’s sacred cows; they must present their realistic plans to fix the debt — plans in which those sacred cows will have to be touched.

Changes will have to be made. We can do it on our own terms, or we can wait until we are hit with a crisis and are forced to — as we have seen in Greece and Portugal. Let’s hope our leaders are willing to come together to fix the debt while we still have time.

Op-Ed: 'Fix the Debt' Campaign Comes to Idaho

Coeur d'Alene Press | August 16, 2012

With the election season moving into higher gear and a “fiscal cliff” on the economic horizon, the American public will be hearing more and more about the crushing debt our country faces. As it happens, Idaho is extremely lucky to have two Members of Congress, Senator Mike Crapo and Representative Mike Simpson, who have been spearheading a growing, bipartisan charge to tackle the issue.

That’s why I was honored to be joining these two leaders in Boise to discuss the work of the Campaign to Fix the Debt. We launched the campaign in July as a non-partisan push to put America on a better fiscal and economic path. Members of the campaign have come together from a variety of social, economic and political perspectives, united around a common belief that America’s growing federal debt threatens our future prosperity and that we must address it.

Over the coming months, we will mobilize key communities—including leaders from business, government, and policy—and voters all across America to urge our elected officials step up and solve our nation’s serious fiscal challenges by passing a comprehensive deficit reduction plan.

Luckily, courage and leadership on this issue are not exclusive to the Idaho delegation. Senator Crapo and Representative Simpson are part of a small but expanding circle of lawmakers from both houses of Congress and both sides of the aisle who are willing to discuss, and seek common ground on, the hard choices necessary to set us on a sustainable budget track.

The case for action on this front is stark. Public debt is equal to more than 70 percent of the U.S. economy and is on track to rise well over 100 and 200 percent in the next few decades. That’s way above historical levels we’ve experienced here in the U.S., where debt has averaged about 40 percent of our economy, and way above levels economists consider to be safe.

The corrosive effects of such deep debt threaten our standard of living and our fitful recovery from the Great Recession. Unchecked, it will almost certainly mean higher interest rates throughout the economy. That will make it much harder to buy a new car, buy a new house, or start a new business. It will also make the cost of everyday activities more expensive. On a national scale, this translates into a slower economy, with fewer jobs and lower wages.

But it’s not all doom and gloom. Since its launch a few weeks ago, our campaign has been getting a great deal of attention and support. I can tell you from the emails, letters, phone calls and Tweets we receive that the American people are hungry for an adult conversation on what we are up against and how we can fix the debt.

I am often asked what everyday people can do to influence this crucial debate. My answer is to (1) thank those elected officials who have already committed themselves to the cause and (2) make sure, during the fall campaign and beyond, to press candidates and officeholders to explain exactly what they will do to fix America’s finances and avoid saddling our children and grandchildren with a crippling debt burden. I also encourage them to sign up to receive more information on the issue and join the cause at www.FixTheDebt.org.

Despite all of the roadblocks and inertia that confront those seeking to bring people together, across party lines, to find common ground on this issue, I am convinced that it can and will happen. But not without a groundswell of grassroots support that lets every politician know that kicking the fiscal can down the road is no longer acceptable—and may be harmful to their political health.

While there certainly are brave lawmakers in Washington trying to forge a bipartisan consensus on debt reduction, we’re not there yet. We need every American’s help to get a meaningful deal done. In the past, this country’s greatest challenges have inspired some of our finest moments. I am confident that this can be one of those moments.

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