Cut, Cap and Balance - The Way Out of Debt

Posted: Jun 19, 2011 12:01 AM
Cut, Cap and Balance - The Way Out of Debt
If Treasury Secretary Timothy Geithner is to be believed, America is just 43 days away from Armageddon. Of course, from the stimulus to Dodd-Frank, Mr. Geithner has done nothing to warrant our trust when it comes to raising the nation’s debt ceiling.

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.

Early this month, 103 House Republicans sent a letter to House leadership asking for them to stand firm and either support cut, cap and balance or come up with a similarly bold solution that rises to our nation’s challenge by preventing a Greece-like crisis that seems more and more plausible.

Given week after week of depressing news about our own economy – stubbornly high unemployment, faltering consumer confidence and dreadful job creation numbers – a commonsense, simple yet bold, and clear solution is what this country needs right now.

In this battle for our nation’s future, conservatives have an obligation to hold firm in their demand for serious changes. Cut, cap and balance is one such proposal. And there may be others – enactment of the policies and reductions contained in Paul Ryan’s budget or in The Heritage Foundation’s Saving the American Dream.

The bottom line is this: our children and grandchildren cannot afford to pay the tab for the spending that is going on in Washington right now. The cut, cap and balance approach is the only one on the table right now. President Obama and Congressional Democrats have not offered a plan to save our country. Instead, they continue to demagogue conservative attempts to restore American exceptionalism.

Ignoring our nation’s problems is no longer sustainable. Recent riots and looming default in Greece – which has an economy roughly the size of Maryland – should make that clear. The question for lawmakers and Americans is simple: do you want your children to grow up in modern-day Greece?