Debt solution must be fair and balanced
Social Security checks to nearly 80,000 Alaskans could be delayed. Medicare benefits to 65,000 Alaskans may be affected. More than 25,000 active duty Alaskan military personnel might have trouble getting paid on time.
These are the tip of the iceberg of potential problems for Alaskans if Congress fails to approve a new debt limit, and the federal government defaults on its financial obligations.
I can’t think of a more irresponsible predicament. That’s why I’m working every angle possible to pass a responsible federal budget which also sets a new debt limit.
Unless Congress acts before Aug. 2, the ramifications could set back our nation’s recovery from the worst economic disaster since the Great Depression.
It’s easy to point fingers at how we got here. Politicians from both political parties share blame for borrowing to pay for U.S. engagement in Iraq and Afghanistan, and extending tax cuts to the wealthiest Americans. That alone cost the federal treasury $4 trillion.
In early 2009 to stimulate the economy, Congress and the Obama administration further increased the national debt by investing in public infrastructure and providing even more tax breaks.
Today, this nation is more than $14 trillion in the hole. Continued deficit spending slows economic growth and forces future generations to pay the bill.
Some in Washington intentionally mischaracterize the need to increase the federal borrowing limit as incurring new debt. That’s simply not true.
The ceiling on federal debt has been raised 74 times since it was established, including five times under President George W. Bush.
No less a fiscal conservative than President Ronald Reagan warned about serious consequences of failing to raise the federal debt limit in 1983, when he said: “The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets.”
Now’s the time to make the politically painful but necessary choices to tackle the debt and put the nation on firmer financial footing. I favor an approach that achieves three simple goals: cut federal spending, grow jobs and the economy, and is fair and balanced for all Americans.
Cut spending: The Senate Budget Committee, of which I’m a member, just produced a plan to reduce the deficit by $4 trillion over 10 years. Its foundation is $1.2 trillion in cuts to virtually all federal agencies, plus savings in Defense which now represents nearly a fifth of all federal spending.
Our plan also protects Medicare, Social Security and veterans benefits while imposing a three-year freeze on congressional pay and cutting federal travel.
Create jobs: With the national jobless rate still above 9 percent, any deficit solution must continue the economic recovery. Our plan protects key investments in education, energy and infrastructure which are vital to help grow the economy. Overall spending would be reduced to the same level as during the Reagan administration.
Treat all Americans fairly: I favor a solution that’s balanced between cuts and new revenues so no group of Americans is singled out. A plan just passed by House Republicans is dubbed “cut, cap and balance.” In truth, that plan cuts Medicare and Social Security benefits for seniors while capping taxes for millionaires and billionaires, which isn’t balanced at all.
I’m working to repeal the tax give-away to the richest 1 percent while eliminating tax shelters and loopholes. I support simplifying the tax code for working Americans, reducing tax brackets from six to three and encouraging small business expansion.
With much of Washington mired in partisan inaction, financial agencies already are looking to downgrade federal bonds. This means increased interest rates, raising the cost of mortgages, utility rates, food and gasoline.
Action is needed now to cut federal spending and grow our economy in a way that’s fair and balanced for all Americans and puts us on a course toward economic sustainability.
Mark Begich is the junior U.S. senator from Alaska.