Putting Out a Two-Alarm Fire
Putting Out a Two-Alarm Fire
After the markets closed on the Friday following the “debt deal,” Standard & Poor’s delivered a blow to Washington and to the American people: it downgraded the country’s top-notch AAA credit rating. Unfortunately for the American people, Washington already received the wake-up call. It just hit the snooze button again. Now, the fire alarm is ringing, too.
In April of this year, S&P issued a downgrade threat. That was nearly five months ago. That was plenty of time for Washington get out of bed and prevent this embarrassing slight to our standing in the global marketplace.
Washington had an opportunity to deliver a solution that would give the markets the confidence they need. A solution like “Cut, Cap, Balance” – which I supported and held firm for – would have provided the short-term increase in the debt limit, but also improved and ensured the long-term health of Washington’s ledgers and America’s economy. The House passed it while the Senate simply refused to vote on it and the President issued a veto threat.
“Cut, Cap, Balance” would have prevented the downgrade because it provided for substantial and meaningful immediate cuts, caps on future spending tied to the overall performance of the economy, and passage of a Balanced Budget Amendment. Washington would have sent a message that it was ready to be a prudent and responsible borrower and spender; instead, it sent the same message it has offered for years: Washington ignores the reality that it is broke.
To turn off the alarm clock and the fire alarm, Washington needs a comprehensive solution that restores the nation’s AAA rating and gets the economy moving again. There is a reciprocal relationship between these two goals, as achieving one will help achieve the other.
When the new Joint Committee – a 12-member product of the debt limit deal – convenes, it will be charged with coming up with $1.5 trillion in cuts. Exceeding that requirement would tell lenders that Washington wants to reduce annual deficits and the overall debt by more than has been committed. Simultaneously, job creators would hear that Washington has no interest in spending more than it is now, thus no need for increased taxes.
Job creators also need to hear that Washington wants to pursue an agenda of prosperity. This means Washington must scale back its regulatory grip and provide tax certainty for the men and women of this nation whose entrepreneurial pursuits will get this economy moving again. This also includes repealing the new health care law that already has employers scared and nervous about the costs they will incur while trying to comply with it. And, while we are looking for additional ways to grow the economy, the President should delay no longer in sending three pending free trade agreements to Congress for its approval.
The issue of needing more revenue will take care of itself if we pursue a solution aimed at economic growth, not government growth. Simply put, Washington will have more money to spend when there are more taxpayers and more sales. I agree, we need more revenue, but the way to do it is by adding new taxpayers, not new taxes.
America cannot afford another alarm, so Washington has no choice but to multitask and fix immediately the mistakes of the past and the errors of recent.