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.
In a survey conducted for the coalition among 1,000 likely U.S. voters by On Message Inc., when asked to choose among the three approaches currently on the table a clear plurality of 49 percent picked Cut, Cap, and Balance as their preferred method of dealing with the current fiscal crisis.
Only 21 percent said they preferred a decade of spending cuts “that are larger than the debt ceiling increase but without a balanced budget amendment,” and just 9 percent said they favored the clean debt ceiling approach President Barack Obama and many congressional Democrats want, which would merely increase the debt limit without any corresponding reductions in spending and fail to stop the growth in the federal government. (The remaining four percent said they would be happy with any of the three.)
The same poll showed that the Cut, Cap, and Balance approach is favored by 62 percent of Republicans, 51 percent of independents, and even 37 percent of Democrats.
“Cut, Cap, and Balance is the single most significant reform package Congress has seen in decades,” said Utah Sen. Mike Lee, who wrote the Balanced Budget Amendment included in the pledge. “It forces Washington to balance its books with strict, enforceable fiscal restraints and will cut spending significantly and immediately to improve our economy and create jobs.”
“We cannot continue to rack up debt without first addressing the underlying problems that cause Washington to overspend,” Lee added. “Supporters of the pledge are saying we want to fix the problem before it gets any worse. Opponents believe we can keep piling up debt and just hope Washington changes on its own. We owe future generations more than that and have a responsibility to do the right thing for them today.”
America understands the problem. It’s not certain that Congress or the White House does. As Sen. DeMint put it, “Americans know we can’t wait to save our country, and they are tired of politicians saying, ‘Trust us, we’ll fight after the next election.’ We agree we need immediate spending cuts, caps and entitlement reform. But that’s exactly what Washington did in the nineties when we were $5 trillion in debt — and now Gramm-Rudman is ignored, the entitlement reforms never materialized, and debt has exploded to over $14 trillion.”
“Americans won’t be fooled again,” DeMint continued. “They know none of these grand promises will ever happen unless we force Washington to do it with a balanced budget amendment. Let’s see Democrats and President Obama try and explain that they want to shut down government because they refuse to balance our budget.”
The supporters of the pledge are serious. In fact, they are just as serious — if not more so — than the Democrats who keep reassuring their friends in government that the GOP is certain to cave and will give in on some form of “revenue enhancements” in order to get a deal on the debt ceiling. It’s up to the American people to make sure Congress knows which side of the equation they are on.
(More at PJTV: “New CBO Report Warns of Dire Debt Crisis. Does the White House Care?”)
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