If White House and congressional negotiators can’t get a long-term deficit reduction package done before America defaults on its debt, then Congress should take a clean debt limit vote, send it to the president, and get back to work on the budget.
Why should Congress de-link the debt limit an
d the deficit reduction talks? The only reason they are now linked is because of politics. There is a better reason to separate the two: America’s economic health.
Business groups, including the U.S. Chamber of Commerce, recently sent a letter to Congress asking it to pass a debt limit increase to avoid a default that could raise the cost of borrowing for businesses and homeowners. Moody’s rating agency warned that lack of action on the debt limit could lead to a downgrade of America’s AAA rating, which would raise the cost of borrowing and make deficits worse. Federal Reserve Chairman Ben Bernanke testified that a default would send a shock wave through the entire financial system. That includes the middle class. We don’t need another shock wave.
Simply put, failure to avoid a government default will do severe harm to America’s economy and the middle class.
Unbelievably, there are members of Congress and presidential candidates who still don’t believe that default is disaster. Default means higher interest rates on credit cards, home loans and business loans. The impacts are real.
The question some may have is: Does de-linking a vote to avoid default remove the incentive to cut the deficit? Maybe at first, but it shouldn’t. The deficit problem is too big to ignore and Congress and the president need to put politics aside and still take action to cut the deficit. We need to develop a long-term, substantial deficit reduction package.
Consider the numbers. The nonpartisan Congressional Budget Office projects that the 2011 budget deficit will be smaller than last year’s but still unsustainably large. These same projections show that the country will spend about $40 trillion over the next decade. Surely, we can find a way to reduce the deficit and still maintain key investments in infrastructure and education to grow the economy and protect health care and retirement for seniors.
I believe we must take a balanced approach to balancing the budget. Spending cuts that include cutting agriculture subsidies and an accelerated drawdown from Afghanistan, combined with closing tax loopholes for oil and gas companies and returning to the tax rates on high end incomes that existed in the high-growth 1990s, is the beginning of a formula that will test each party’s mettle and commitment to deficit reduction. A hard look at entitlements is warranted, but Medicare must remain a guaranteed benefit and not become a voucher. The $106,800 cap on earnings subject to the Social Security tax should be eliminated to ensure the long-term solvency of Social Security and protect seniors. Corporate tax reform coupled with closing corporate tax loopholes should remain a serious goal.
No ideology will resolve our budget problem. And as sure as it will rain in the Northwest, Republicans will blame President Obama for the bad economy and Democrats will blame former President George W. Bush for the recession. Politics and blame never created a job. And they won’t solve the deficit and debt problem.
I like to keep in mind that other countries still look to the United States for economic leadership. They are concerned about U.S. debt and are looking for signals that America will get its debt under control. The key to getting our debt under control is to grow our economy. That is why playing politics with the debt limit is so dangerous.
Congress and the president are still not off the hook to finish the work to reduce the deficit. They have to cut the deficit and control the debt and do both in a way that maintains our economic leadership — a leadership that I do not wish to give up.
So, it may not sit well with some, but I believe it is time to separate the debt limit vote from the deficit reduction talks. The impact of defaulting on bills that America is committed to paying is too great. Congress must avoid default, then continue the work on deficit reduction.
U.S. Rep. Rick Larsen, D-Everett, represents the 2nd Congressional District.
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