Kent Conrad: A Way Out Possible
The government is still shut down, and the debt ceiling is looming around the corner. Markets are beginning to worry, and the country is facing its first ever default if action is not taken soon.
In today's The Hill, former Senator Kent Conrad (D-ND), co-chair of the Campaign to Fix the Debt and CRFB board member, captures the danger of failing to raise the debt ceiling. Conrad writes:
We are on a collision course with financial calamity. A first-time-ever failure to extend the federal debt limit would lead to higher interest rates not only for the U.S. government, but also for every business, home, car, student and personal loan in America. The looming debt ceiling — and the ongoing government shutdown — is causing harmful uncertainty around the world and here at home.
But there is a way out.
This is no doubt a difficult position for lawmakers, but the good news is that much of the work of developing a way out has already been done in bipartisan plans. The way out Conrad recommends is:
- Extend the debt limit for at least one year, preferably two, without condition. That aligns with Obama’s position that we not negotiate on the debt limit.
- Do the negotiating within the context of a continuing resolution to fund the government and end the shutdown.
- Agree to the Republican funding level of $988 billion for this fiscal year.
- Agree on a process for individual and corporate tax reform next year. The goal should be to reduce rates and raise additional revenue to go toward deficit reduction. A reasonable goal would be $300 billion to $400 billion in additional revenue over the next 10 years.
- Agree to additional savings in Medicare and other healthcare accounts by better coordinating care, especially of the chronically ill. A reasonable target would be $300 billion to $400 billion over the next 10 years.
- Take the savings from numbers 4 and 5 above and use them to cut in half the effects of the sequester.
- Adopt “chained CPI” as a more accurate measure of inflation that both reduces spending and raises revenue. The combined effect is a savings of about $250 billion over the next 10 years
- Repeal the medical device tax of 2.3 percent, about which no one seems enthusiastic.
- Name a commission to reform Social Security to ensure its long-term solvency. The longer we wait, the more draconian the solutions will have to be.
Some lawmakers might not like all of these proposals, but Conrad feels we need everything on the table. That has been the theme of bipartisan plans so far -- each side will have to make sacrifices to get a deal. Compromise still remains the best way out for lawmakers.
Click here to read the full op-ed.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.