Yet, a small bipartisan group led by Vice President Joe Biden is operating under the false premise that America will default on August 2. That group, lawmakers and the American people must understand that the U.S. will not default on its debt on August 2. There will be more than enough revenue coming into the Treasury to service our debt, and do much more.
Reports seem to suggest the Biden-led group is inching toward an agreement to raise the debt ceiling by $2.5 trillion. Polls suggest the public is disinclined to raise the debt ceiling, and many of those who support raising the debt ceiling want substantial reforms attached to any increase.
The Biden-led group is talking big, but will it really rise to the occasion?
Sources on the Hill and press reports suggest they may not, as the group may be embracing a formula that will lead to an additional $1 trillion in new revenue. It would be one thing if that revenue was generated solely by economic growth, but reports suggest much of that revenue will come from tax increases.
Tax increases are unacceptable. If there is to be a deal, it should focus on pro-growth policies, not anti-growth tax increases.
The good news is that conservatives in Congress have been firm that tax increases are off the table. Even better news is that conservatives in Congress have actually put an idea on the table that does rise to the occasion.
The plan is called “Cut, Cap and Balance.”
Cut – Real cuts in discretionary and mandatory spending that would cut the deficit in half next year. Over ten years, this would taxpayers around $2 trillion – not a bad first step.
Cap – An enforceable cap to make sure that federal spending does not exceed 18% of Gross Domestic Product (GDP), with triggers that will reduce spending automatically if reached. The alternative, proposed by the left, has been triggers that will increase taxes. Again, conservatives are proposing pro-growth policies, and liberals are proposing anti-growth policies. The choice seems clear.
Balance – A Balanced Budget Amendment (BBA) is necessary to lock in these necessary choices and protect our children and grandchildren from future irresponsibility. Any BBA must contain protections against tax increases and judicial activism, and contain a Spending Limitation Amendment (SLA) that will ensure spending levels do not exceed 18% of GDP.