Debt Wish: The Final Countdown

| February 9 2013

Debt Wish: The Final Countdown

A recent Fox News poll found that 83 percent of Americans believe Washington has a spending problem.  The Congressional Budget Office (CBO) recently warnedthat by 2021, the interest payments on our debt would overtake all national defense spending.  And late last year, the CBO made clear that if Washington failed to cut spending, the long-term consequences of inaction would be worse than the sequester.

Washington cannot continue to saddle future generations with massive debt, which is why the sequester passed with bipartisan support in the House and theSenate.  Americans understand that spending too much is what got us into this mess, and raising taxes to fund more spending is the last thing we should do.  If Washington wants to stop the sequester, it needs to find $85 billion in offsetting cuts – not offsetting tax hikes.

 

WE HAVE A SPENDING PROBLEM

Americans Understand We Have A Spending Problem:

83 Percent Say Washington Has A Spending Problem. “During recent budget negotiations, Obama reportedly said he doesn’t believe the government has a spending problem.  Most voters — 83 percent — disagree.  That includes most Republicans (97 percent), independents (87 percent) and Democrats (69 percent).”(Dana Blanton, “Fox News Poll: Voters Say Country Weaker Now Than Before Obama,” Fox News, 2/7/13)

Up From 74 Percent Last Month. “[T]he vast majority of Americans (74 percent) believe the federal government spends too much, and the same percentage (74) disagree with President Obama’s statement that “We don’t have spending problem.” (The Tarrance Group, “New Poll: Majority Of Americans Disagree With President On Spending,” Public Notice, 2/18/13)

Washington Says We Don’t:

President Obama: “We don’t have a spending problem.” (Stephen Moore, “The Education of John Boehner,” The Wall Street Journal, 1/6/13)

White House Press Secretary Jay Carney: “Deficit reduction is not a worthy goal unto itself.” (Daniel Halper, Carney: “Deficit Reduction Is Not A Worthy Goal,” The Weekly Standard, 1/10/13)

The CBO Agrees With Americans:

By 2023, Debt Held By The Public Will Equal 77 Percent of GDP. “By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.” (“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)

The CBO Says That A Large Debt Poses An Increased Risk. “Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.”(“The Budget And Economic Outlook: Fiscal Years 2013-2023,” Congressional Budget Office, 2/4/13)

FLASHBACK: A Continued Surge In Debt Would Be Worse Than The Sequester. “[I]f the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.” (Congressional Budget Office, “Economic Effects of Policies Contributing to Fiscal Tightening in 2013,” 11/8/12)

 

SEQUESTER PASSED WITH BIPARTISAN SUPPORT

House: Budget Control Act of 2011 Passed With Bipartisan Support, 179 Republicans And 95 Democrats (S. 365 (112th): Budget Control Act of 2011, Gov Track,8/1/2011)

Senate: Budget Control Act of 2011 Passed With Bipartisan Support, 45 Democrats And 28 Republicans (On the Motion (Motion to Concur in the House Amendment to S. 365), Gov Track, 8/2/11)

Here’s What They Said:

President Obama: “This compromise guarantees more than $2 trillion in deficit reduction.  It’s an important first step to ensuring that as a nation we live within our means.” (President Barack Obama, Statement, “Statement By the President,” 8/2/2013)

Rep. Boehner: ““This is a positive step forward that begins to rein in federal spending, but it’s only a step.  We should save the celebration for when a Balanced Budget Amendment is ratified, the deficit is fixed, and our economy has returned to creating jobs.” (Sen. John Boehner, Statement, “Congressman Boehner Statement on Senate Passage of the Budget Control Act,” 8/2/12)

Sen. Reid: “Lays the Groundwork For a Balanced Deficit Reduction Package.” “…Neither side got everything it wanted, but our nation got a bipartisan compromise that averts an economic catastrophe, and puts us on a path toward fiscal stability. This agreement cuts the deficit by nearly a trillion dollars now and lays the groundwork for Congress to deliver a balanced deficit reduction package this fall.” (Sen. Harry Reid, Statement, “Reid: Senate Bipartisan Committee Puts The Nation On Track To Fiscal Stability,” 8/2/2011)

Sen. Reid: “Today We Made Sure America Will Pay Its Bills. Now It’s Time To Make Sure That All Americans Can Pay Theirs.” (Sen. Harry Reid, Statement, “Reid: Senate Bipartisan Committee Puts The Nation On Track To Fiscal Stability,” 8/2/2011)

Sen. McConnell: ““Let me be clear: the legislation the Senate is about to vote on is just a first step. But it’s a crucial step toward fiscal sanity, and it’s a potentially remarkable achievement given the lengths to which some in Washington have gone to ensure a status quo that’s suffocating growth, crippling the economy, and imperiling entitlements.” (Sen. Mitch McConnell, Statement, “McConnell: Bipartisan Agreement Will Slow Down the `Big Government Freight Train’,” 8/2/11)

Rep. Cantor: “Tonight the House prevented default and boosted economic certainty by ensuring America pays its bills while we start getting our fiscal house in order…For too many decades, both parties in this town have spent money that we just don’t have. … [T]he American people sent a message and have begun to change the direction of this country by stopping the spending and starting the saving. And this measure that cuts spending and puts in place long-term fiscal reforms marks the first big change we have accomplished.” (Rep. Eric Cantor, Statement, “Congressman Cantor Statement on House Passage of Budget Control Act,” 8/1/2011)

 

FISCAL CLIFF DEAL ALL TAXES, NO CUTS

Fiscal Cliff Deal Included All Tax Hikes, No Spending Cuts:

The Atlantic:“There Are No Spending Cuts In This Deal.” (Derek Thompson, “Fiscal Cliff Deal FAQ: What Just Happened And What It Means For You,” The Atlantic, 1/2/13)

The New York Times: “And It Includes Almost No Spending Cuts.” (David Leonhardt, “For Obama, A Victory That Also Holds Risks,” The New York Times, 1/2/13)

The Associated Press: “[The Fiscal Cliff Deal] Puts Off The Toughest Decisions About Spending Cuts…” (Charles Babington, “Analysis: Cliff Deal Is Another Pain-Free Punt,” The Associated Press, 1/3/13)

BankruptingAmerica.org is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being.

 

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