The Congressional Budget Office warned Wednesday that the U.S. economy is about to go underwater.
Issuing its annual long-term budget outlook, the nonpartisan CBO said that current federal tax-and-spend policies could, by the end of the decade, push total U.S. government debt to a point where it is bigger than the entire economy.
As if that were not bad enough, the congressional agency further predicted that total debt could reach a level double the size of the economy in 2035, just fifteen years further down the road.
If the debate over increasing the $14.3 trillion federal debt limit was already critical to the nation’s future financial health, this new CBP analysis just made it doubly so. The question, as it has been since the issue first blipped on the radar screen last fall, is what to do about it.
The Republicans have taken a firm position against including tax increases as part of any deal on the debt limit. Democrats, on the other hand, are insisting on them. Leaks attributed to aides close to the negotiations with congressional leaders led by Vice President Joseph Biden keep producing creative ideas (a rumored abolition of indexing swept the nation’s capital Wednesday afternoon — but that, like a proposal offered up by some in Congress to abolish or severely curtail the mortgage interest deduction, is a clear non-starter).
Things have reached the point where the pressure to agree to tax increases has gotten so high that House Majority Leader Eric Cantor, R-Va., and Senate Republican Whip John Kyl, R-Ariz., both walked out of the negotiations on Thursday — with Cantor indicating it was time for President Barack Obama to deal directly with House Speaker John Boehner.
Any eventual deal is going to be heavy on the spending reduction side, due in no small part to a commitment made by a handful of congressmen and senators to a program to cut the deficit, cap spending, and balance the federal budget.
Unveiled Wednesday by a group of congressional conservatives, and backed by nearly two score center-right organizations (Americans for Prosperity, FreedomWorks, For America, Let Freedom Ring, Independent Women’s Voice, the National Taxpayers Union, Americans for Limited Government, and more), the “Cut, Cap, and Balance pledge” commits the signers to
Oppose any debt limit increase unless all three of the following conditions have been met:
- Cut – Substantial cuts in spending that will reduce the deficit next year and thereafter.
- Cap – Enforceable spending caps that will put federal spending on a path to a balanced budget.
- Balance – Congressional passage of a Balanced Budget Amendment to the U.S. Constitution — but only if it includes both a spending limitation and a super-majority for raising taxes, in addition to balancing revenues and expenses.
In less than 24 hours after its introduction on Capitol Hill, the pledge was signed by 11 sitting United States senators, 15 members of the U.S. House of Representatives, a handful of candidates for Congress and president of the United States, and more than 12,000 citizens. The numbers now are even higher.
Usual Washington cynicism aside, supporters of the pledge are serious about getting it done.
“In 2010, Americans threw out the Democrats and elected Republicans to stop the spending and debt,” said South Carolina Sen. Jim DeMint, one of the first to sign the pledge. “But they feel let down with the weak CR deal. If Republicans are serious in believing our country is on the edge of a fiscal cliff, we must fight now for the passage of a balanced budget amendment, or we don’t deserve to be here.”
DeMint, whose support is crucial in the South Carolina’s early GOP presidential primary, says he won’t even consider supporting any candidate that doesn’t sign the pledge.
Kentucky Sen. Rand Paul, another Tea Party favorite, said of the pledge: “We as a Congress must get serious about the solutions we propose to restore fiscal discipline and prosperity.”
“I am convinced,” Paul continued, “after my time here in Washington, that the only way we can get our fiscal house in order is through structural reform such as those proposed in the Cut, Cap, and Balance pledge. With these conditions in place, we can begin the process of defeating this catastrophic national debt, which is why I wholeheartedly pledge my support.”
The ideas embodied in the pledge also have strong support among the American people.