Editor’s note: This is an analysis of the debt debate by the Ethics & Religious Liberty Commission’s Washington D.C. office
WASHINGTON (BP)–Tuesday evening, after the closing bell on Wall Street had rung for the day, the House voted on President Obama’s plan to raise the debt limit by $2.4 trillion without requiring any spending cuts. To no one’s surprise, the measure hit the chamber’s ceiling with a thud, failing in a bipartisan vote of 318-97. Some labeled the vote on a “clean” debt-limit increase as simply a charade and pure political theater.
But Americans should hope, for the sake of their children and grandchildren, that it was an early demonstration of congressional backbone on fiscal restraint that won’t be bent or broken — that any plan to increase the federal debt limit without significant spending cuts is dead on arrival.
The vote to increase the debt limit to $16.7 trillion comes at a time when the government is at a crossroads. That the nation is on the verge of plunging off a cliff in fiscal freefall is no secret. On May 16, the government hit its $14.3 trillion legal limit to borrow. That’s a stack of $1 bills that would stretch to the moon and back — twice. Unless Congress raises the ceiling by Aug. 2, says Treasury Secretary Timothy Geithner, the nation will begin defaulting on its loans.
The House vote to raise the debt ceiling came on the eve of budget talks between President Obama and the entire House Republican caucus. In Wednesday’s White House meeting, House Speaker John Boehner, R-Ohio, came armed with a letter signed by more than 150 economists calling it “critical that any debt limit legislation enacted by Congress include spending cuts and reforms that are greater than the accompanying increase in debt authority being granted to the president.”
On Thursday, the president met with House Democrats. Meanwhile, Vice President Biden continues ongoing talks with a bipartisan congressional delegation to try to hammer out an agreement on a fiscal path forward. Budget talks at both ends of Pennsylvania Avenue, in fact, are likely to consume much of the summer, perhaps running the government up against the looming August debt-default deadline.
Yet, as the clock on the debt doomsday ticks, fiscal conservatives in the House have not been short on ideas. In April, the House passed a budget to cut $6 trillion over 10 years; the measure died last month in the Senate. For its part, the upper chamber has not passed a budget in 760-plus days and counting.
Meanwhile, House conservatives are taking a page from Economics 101 on an even broader plan to take on the debt: cut, cap and balance. The three-part solution would cut discretionary and mandatory spending in order to slash the annual spending deficit in half next year; cap federal spending at 18 percent of Gross Domestic Product (GDP); and send the states a balanced budget amendment. The Southern Baptist Convention’s Ethics & Religious Liberty Commission continues to view this as a step in the right direction.
One measure recently introduced that tracks with the plan — the One Percent Spending Reduction Act (H.R. 1848) — would cap spending at 18 percent of GDP. That would force a spending drop from the current rate of 24 percent of GDP and bring the government more in line with historic averages. Also awaiting votes are multiple balanced budget amendment proposals. For example, S.J. Res. 56, part of the “cut, cap and balance” plan, tracks closely with the “One Percent” bill. The biggest difference is the timeline.
The “One Percent” bill would lower spending by 1 percent each of the next six years, cutting $7.5 trillion in the near-term. The balanced budget amendment, which also mandates a cap on spending at 18 percent of GDP, would not kick in until five years after ratification by the states. This means no spending cuts in the interim. While the “One Percent” bill is an improvement on the balanced budget amendment, it still does not achieve spending reductions fast enough.
But both proposals share the right theme: The path toward fiscal responsibility can only be one that includes significant spending cuts and budgetary reform. Anything less, as the 150 economists wrote Wednesday, would “represent a tremendous setback in the effort to deal with our national debt.”
Doug Carlson is manager for administration and policy communications for the Ethics & Religious Liberty Commission’s Washington D.C. office.