Sen. Conrad Calls for Immediate Action on Long-Term Fiscal Plan
Senator Kent Conrad (D-ND), chairman of the Senate Budget Committee, is calling for swift and decisive action to address our worsening fiscal problems. His comments come in reaction to the Congressional Budget Office (CBO) January 2011 baseline report, which was released yesterday. To see CRFB's analysis of the new baseline, click here. It certainly provides a dire assessment of our fiscal stability compared to just their last report in August: the December tax cut deal added an additional $858 billion to the debt, which is expected to reach 76% of GDP by 2020 - and those calculations are optimistic!
Senator Conrad certainly understands how serious this problem is. In a statement he released following the CBO report, he said:
CBO’s report should be another wake-up call to the nation. In the near-term, due to passage of the tax extension package and the slow pace of the economic recovery, CBO is now expecting to see deficits of more than $1 trillion a year continuing through at least 2012. And as disturbing as those near-term deficits are, the long-term outlook is even worse. It is the deteriorating long-term outlook that is the biggest threat to the country’s economic security.
The fiscal challenge confronting us is enormous. To solve this problem, it will require real compromise and a great deal of political will. We need everyone at the table. And we need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground. We can’t continue to put this off.
We need to reach an agreement this year. The President’s Fiscal Commission provided a model for a bipartisan way forward. Now it is up to the Administration and members on both sides of the aisle in Congress to come together to finish the job.
This spirit of bipartisanship commitment to enacting a credible solution will be critical in the coming months. One of the first major tests of this resolve will come when the debt ceiling needs to be raised, which Treasury Secretary Geithner says will occur between March 31 and May 16. In a press conference later in the day yesterday, Sen. Conrad said the need for a comprehensive fiscal plan is so great that he wants to use the debt ceiling increase as leverage to get deficit reducing legislation in place. He said (subscription needed):
I personally believe we should ask for, and insist upon, a long-term plan to be agreed to before we have any long-term extension of the debt, so that we keep the pressure on to write the long-term plan that virtually everyone agrees is important to the country.
We stand behind Senator Conrad's bold initiative to get control of our growing debt and deficits. While we believe the debt ceiling needs to be raised, we agree that it should only be done in a responsible way, alongside a credible plan to reduce our record budget deficits. In our debt ceiling primer, we say:
While failing to raise the debt ceiling would create a debt crisis, failing to control the debt could eventually do the same. If investors believe the
may be unable to repay their debt – or may inflate their way out of it – we would likely see a growing refusal to invest in Treasury securities...
When they do vote to raise the ceiling, policymakers must include along with this a set of measures which will substantially improve our medium and long-term fiscal position – preferably enough to bring the debt down to 60 percent of GDP over the decade and stabilize it below that level. Any long-term increase in the debt ceiling should be conditional on the inclusion of such measures.
There are many plans out there to choose from, and you can compare them here. The President's Fiscal Commission, which Senator Conrad served on and supported, came up with a worthy proposal to begin our fiscal debate. We hope it will be given serious consideration in Congress. As CBO has told us, our fiscal problems are only getting worse and we need to act as soon as possible.