Between the ‘Line’s: Speeches, Meetings, Anniversaries, and Letters Galore
Pawlenty of Ideas – GOP presidential candidate Tim Pawlenty gave a speech in Chicago on Tuesday where he laid out his fiscal and economic policy agenda. Among his proposals are reforming the tax code by eliminating many tax breaks (see our ideas for tax expenditures) while reducing tax rates. He also called for a balanced budget amendment to the U.S. Constitution that caps federal spending at 18% of GDP. In addition, he mentioned raising the Social Security retirement age (see our ideas for Social Security reform), block granting Medicaid (see our ideas for controlling health care costs), and limiting the growth of defense spending. His plan also assumes a very optimistic 5 percent annual GDP growth rate to help reduce the deficit.
Biden Band Gets Back Together – The talks led by Vice President Biden resume Thursday after a week-long hiatus with a meeting of the bicameral, bipartisan group that is trying to negotiate a deal to raise the statutory debt limit and achieve $4 trillion in deficit reduction. Getting the group to sing the same tune will be difficult. One of the items on the meeting agenda is to discuss possible revenue increases, but Republicans have been adamant that taxes should be off the table. The group reportedly will also discuss capping spending as a percentage of GDP, along the lines of legislation proposed by Senators Claire McCaskill (D-MO) and Bob Corker (R-TN). Conveniently, the Peterson-Pew Commission today unveiled a new Fiscal Toolbox explaining and comparing various budget process tools like spending caps and debt targets that can help set the nation on a sustainable fiscal path.
To the Letter – Washington hasn’t yet produced much in the way of legislation dealing with our fiscal challenges, but lawmakers sure are churning out a lot of letters.
- Members of the House Republican Study Committee (103 in all) sent a letter to Speaker of the House John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) calling for “cut, cap and balance” to gain their support for a debt limit increase. Specifically, they suggest about $380 billion in spending cuts in 2012 to cut the deficit in half; capping spending at 18% of GDP; and a balanced budget amendment like the one supported by all Senate Republicans, S.J. Res. 10.
- Five Democratic senators forwarded a letter to Vice President Biden asking his group that is negotiating a debt limit increase and deficit reduction agreement not to accept the plan to reform Medicare included in the House-passed budget. They say “[w]e hope to identify delivery system reforms and other sources of savings that can extend the life of Medicare in its current form. But we will never allow any effort to dismantle the program and force benefit cuts upon seniors under the guise of deficit reduction.”
- A group of House GOP freshmen (76) penned a letter to President Obama demanding he put forth “a detailed plan that reduces the national debt and addresses entitlement reform.”
- More than half of House Democrats (109) wrote to Speaker Boehner demanding that revenues be put “on the table” in debt talks.
- Congressmen Frank Wolf (R-VA) and Jim Cooper (D-TN) wrote a “Dear Colleague” letter asking for support for the Gang of Six. They write “[t]here is never a convenient time to make tough decisions, but the longer we put off fixing the problem, the worse the medicine will be.”
Gang of Six Continues – Speaking of the Gang of Six, the bipartisan group met on Tuesday, absent Sen. Tom Coburn (R-OK), who has taken a break from the group. The rest of the gang continues to work towards a comprehensive fiscal plan that all members, including Coburn, can agree to. Two members, Senators Saxby Chambliss (R-GA) and Mark Warner (D-VA) spoke to the Economic Club of Washington Wednesday about their work on deficit and debt reduction.
Panetta Hints at Pentagon Penny-Pinching – In his responses to a questionnaire from a Senate committee overseeing his confirmation process, Secretary of Defense-designate Leon Panetta implied that the Pentagon would see significant budget cutting under his watch. Although he didn't offer much in the way of specifics, he did caution that "it must be understood that a smaller budget means difficult choices will have to be made." Senators may try to get the CIA director, and former OMB chief and CRFB co-chair, to elaborate more during his confirmation hearing before the Senate Armed Services Committee tomorrow. The DoD belt tightening has already begun under departing Secretary Bill Gates, who is looking for $400 billion in defense savings over 12 years. Gates, who is stepping down at the end of the month, recently suggested that military pay and retirement benefits be looked at for savings.
Washington Starts to Address the Process – Lawmakers are seriously looking at budget process reforms as a part of efforts to improve the fiscal outlook. The House Judiciary Committee is set to approve a constitutional amendment requiring a balanced federal budget each year next week when it returns from its recess. The bill, H.J. Res. 1, was amended in the committee last week to change the spending cap from 20 percent of GDP to 18 percent and to increase the congressional majority required to raise revenues from a three-fifths vote to a two-thirds vote, putting it in line with the Senate bill supported by all GOP senators. House Republicans are also reportedly considering including biennial budgeting in any deal to raise the debt limit. Under such a measure the annual budget process would be replaced by one where budgets are approved for two years at a time, with the off year used for closer oversight of federal spending. The Peterson-Pew Commission on Budget Reform, a project of CRFB, has spent over two years examining budget process reforms to make the process more functional, transparent and effective in putting the country on a sustainable fiscal course. It offered a suite of reforms in the report, Getting Back in the Black. It also released today a new Fiscal Toolbox that summarizes and compares ideas like spending caps and balanced budget amendments.
Tax Cuts Turn Ten – The tax cuts first enacted in 2001 had their ten year anniversary on Tuesday. CRFB observed the occasion by saying that if they are to see their teenage years, they need to be paid for. The tax cuts are set to expire in 2012 and will cost over $2 trillion by that point.
PowerPoint to the People – CRFB has created a new PowerPoint presentation, Averting a Fiscal Crisis, that clearly and succinctly outlines the scope of our nation’s fiscal challenges as well as some possible solutions. It is designed to offer an objective view of the situation in an accessible format to help foster open discussion about the issue. It is a great resource for community groups, town halls, classrooms, etc. Check it out.