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  • Cut, Cap, and Balance

    The House Republican Study Committee (RSC) has deployed a new theme to be introduced into the debt limit increase debate: “Cut, Cap, and Balance.” The debt limit is expected to be considered by both chambers of Congress by August 2. House conservatives have drawn up a list of demands in consideration for allowing the debt limit to be increased.

    The fault lines are clear in the debate right now. The Los Angeles Times reports today that there is a standoff between the two parties on a debt limit deal, and no comprehensive deal on taxes and entitlement reform is expected.

    The standoff over raising the nation’s nearly $14.3-trillion debt limit may conclude this summer with a more limited round of spending cuts and promises of future reform, pushing off the tough choices about taxes and Medicare until after next year’s election. Republicans, by not compromising on taxes, can continue to campaign on the no-new-taxes stance that is a cornerstone of their political strategy, while attacking Democrats and President Obama for their proposed tax increases on the wealthy. Democrats, whose political prospects have brightened since House Republicans proposed deep cuts in Medicare, have all but ruled out any deal that would relinquish the issue as a political weapon.

    Liberals want to increase taxes to balance the budget. They seek to remove entitlement reform from the debt limit debate, because they fear any changes to these programs. Liberals are pushing right now to divorce the debate over spending cuts from the debate over increasing the debt limit. They don’t want spending cuts to be attached to the debt limit increase.

    Another liberal idea introduced into the debate was President Obama’s mechanism for automatic tax increases if the budget was not in balance starting in Fiscal Year 2014. Obama deployed the idea of a “Debt Failsafe Trigger” as a means to automatically increase taxes and cut spending when the budget is not in balance. Of course, this idea would exempt entitlement programs from the automatic cuts, and one should not expect that these cuts would end up balancing the budget.

    Conservatives want to shrink government and are dead set against raising taxes as a means to balance the budget. The opponents of big government want to pass a Balanced Budget Amendment to the Constitution, set up a tough budgetary mechanism to control spending, and/or implement entitlement reforms.

    Between liberals and conservatives, there is not much common ground on a debt limit deal or on the future of government spending. The Republican Study Committee has taken a different approach to this debate: Put out a list of demands and pledge to stop any increased debt limit unless these demands are met. Instead of cutting secret deals with the Vice President behind closed doors, the RSC is opting for a transparent public negotiation on the debt limit increase that includes the participation of the American people.

    The RSC is gathering signatures for the following Cut, Cap, and Balance Pledge list of demand on the debt limit increase:

    1. Cut. We must make discretionary and mandatory spending reductions that would cut the deficit in half next year.
    2. Cap. We need statutory, enforceable caps to align federal spending with average revenues at 18 percent of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached.
    3. Balance. We must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and a Spending Limitation Amendment (SLA) that aligns spending with average revenues as described above.

    The RSC recognizes that there does not have to be a bipartisan deal on the debt limit increase if conservatives can make it a condition that their list of demands must be met before the debt limit is increased. Conservatives recognize that this may be the one opportunity in a lifetime for Congress to marry strong spending restraint measures to an increase in the debt limit.

    In a letter to Speaker of the House John Boehner (R–OH), conservatives in the House are joining the call for a stop to “out-of-control spending”:

    We must state unequivocally that we will not vote for a “clean” debt ceiling increase. We share your belief, as articulated in your speech in New York on May 9th, Mr. Speaker, that if we do not reverse the out-of-control spending that has led us here, it would be grossly irresponsible for us to extend the limit on the national credit card.

    We shall see over the next month if Congress has the stomach for some real cuts to spending or whether it merely wants to rubber-stamp the credit limit of the U.S. government with no restraint on the appetite for spending that has added $14.3 trillion in excess weight.

    Posted in Economics [slideshow_deploy]

    10 Responses to Cut, Cap, and Balance

    1. LibertyAtStake says:

      They forgot "Grow." What, is four things too many to remember?

      “Because the Only Good Progressive is a Failed Progressive”

    2. George Colgrove, VA says:

      The way I see the federal workforce handling the current debt crisis – considering we the people by a 2/3’s majority do not want to increase the debt ceiling:

      1. They continue to spend at will at the same levels.

      2. The federal workforce spent to the current debt limit without regards to the danger of the level of debt they are putting the country under.

      3. The treasury federal workers are currently borrowing against the entire federal workers pension plans.

      4. The CIA federal workers are a half of a billion dollars short in their pension plan. It is recognized that the pension plan for all federal workers is mostly unfunded.

      5. The extent that the Treasury Department federal workers can borrow against their own unfunded pensions is early August. Therefore, we are borrowing against borrowed money. Or rather, we are operating programs that are mostly unfunded with a backing of an unfunded asset!

      6. We get to August and then we are going to be asked to raise the debt ceiling or else! Last year between May and August, the federal workers spent $370 billion. We are spending 9% more debt this year than last year. So, since May, the federal workers will have likely spent $400 billion of debt by the beginning of August.

      7. The problem here is that with the debt ceiling reached, the federal workers have robbed their own pensions to continue their egregious spending at an unfunded level of $400 billion.

      8. The argument is that we will need to increase the debt ceiling by $2.5 trillion. If we do as the GOP is currently arguing – splitting the difference for next fiscal year (FY12), what will happen is that we will use $400 billion of that debt to backfill the unfunded spending with unfunded assets – meaning that there will be only $850 billion in available debt for August and September and all of next year. August and September will use up $150 based on current spending patterns – leaving $700 billion for FY12.

      9. Since there is no hope for REAL cuts, this will provide deficit spending through next March if we use FY10 numbers. We will be asked again – and again – and again. This raise in the debt ceiling will be the 12th increase since 1996 when the national debt reached $5 billion!

      This is dangerous and stupid and they are going to force us to pay for it!

      The only hope we have is to not raise the ceiling. Federal pensions will be hit hard, but they did it to themselves. The ceiling was reached and they spent anyway – counter to the oath of office they gave to protect the constitution. A nation in collapse has no constitution.

      A freeze on the ceiling will force a immediate cut to all non-essential federal workers. Then next year it will force a balanced budget by default. It is our only hope to get DC under control. The elected officials won’t legislate it and the federal workers will not abide by their oath and control internal spending to avoid a disaster. We cannot count on the federal government to take this seriously enough to stop. Deficit spending is UNFUNDED spending and it cannot continue. This is not a bargaining chip, this is abject stupidity!

    3. George Colgrove, VA says:

      If there is not enough evidence right now to stop deficit spending – there never will be.

      If there is not enough fervor to stop deficit spending today, there never will be.

      If there is not enough knowledge and support at the citizen level to stop deficit spending, there never will be.

      If there is not enough anger at the ineptitude, fraud and deceit in DC that has caused this debt to rise so high, there never will be.

      If there is not enough disgust at the federal workforce, congress and the white house about how the public funds have been abused and how they ALL refuse to listen to us, there never will be.

      If DC wins this round and the debt limit is raised by even one dollar; and if there is not enough to stop that, then there never will be.

      Collapse is sure to follow shortly and then there will be little point. Perpetual Marshal Law (i.e. dictatorship) will be installed as THE solution and the powerful and wealthy federal workforce, congress and the elected officials will have beat us into submission. We will have no constitution, no elections, no rights, nothing. Debt will no longer matter, revenue will no longer matter. Profits will no longer matter. Freedom will become a faint memory to a few of us.

      The fact we had sweeping election back in November should have signaled OUR demand for change. So far, out of an administration that promised change- we are only seeing the same – only scaled up in an egregious manner. We should have seen massive cuts – real cuts – to the tune of 100’s of billions in annual reductions to the size/scope and cost of government. We haven’t. We should have been hearing about consolidations of similar programs and elimination of other programs – but we haven’t. We should have been hearing about honest discussions regarding entitlements and who will be removed immediately. But we haven’t.

      There has been a lot of talk – but that is it. Lots of “Hope” has been raised and then been allowed to be crushed. We the people have not been heard and are not being heard. The country is dissolving in front of us to an impending disaster ahead of us. Yet we talk of new wars, new programs, and new benefits. We need not hear of new cuts – but we need to see it!

      There is no legitimacy of the federal government and its workforce – today they will drive us deeper into debt by another $4 billion – because nothing is being done! There have been about 150 days since we put the GOP in charge of the house – what has been done? Each of those days, the debt has climbed another $4 billion. No one seems to understands the gravity of this. We read of Greece as if it were some off-distance myth. Yet Greece is lucky enough to be bailed out numerous times. The US? Who will bail us out? The taxpayers have done so 11 times since 1996 with debt limit increases. NO MORE! We have no more wealth to continue to allow the corruption, the fraud, the lies and the deceit ton continue. Today it will take $450 billion annually to service the current debt. This was almost the entire DoD budget in 2011 dollars back in 2001! Even the GOP’s best plan guarantees that the US will be in debt by a MINIMUM of $20 trillion in 10 years – IF ALL GOES WELL! It will cost over $700 billion annually to service that debt – assuming our debt does not enter junk status!

      We do not need a 10-year plan. We need a balanced budget today – cut all non-essential duties today and finish out the year without raising the debt. Put all “surplus” cash that is collected from now to October to paying down the debt a little to gain a buffer for emergencies. Then for next year (FY12) make a balanced budget, that meets revenue in the order of $2.2 trillion. The budget will need to at the very least, pay the $450 billion dollar interest tab – meaning federal spending shall not exceed $1.75 trillion! Again any “surplus” shall go to paying off the debt.

      If we cannot stop the madness today and start the process of ridding ourselves on the problem, (i.e. the cancerous federal government) we will not be able to in the very near future.

    4. yenrib says:

      this is a signature for cut cap and balance. I cannot find the signature site.

    5. yenrib says:

      Birney Young is my name. THIS SIGN IN 'THING" is above my grade level.

    6. raul padilla says:

      I hope that anybody with a modicum of love or care for America should sign this pledge so that in the future both republicans and democrats should remember that they don't have the right to put their hands into our pockets and take our money and do with it as they see fit. A balanced budget amendment should be pass to restict politicians from spending our money so recklessly and secure a good future for this wonderful country.

    7. Robert says:

      John Boehner is going to fold faster than a cheap, dollar-store chair – just like he did on the spending resolutions. How many people signed the letter (how many conservatives in the House)? Six? Seven? The RINO's that elected Boehner Speaker knew EXACTLY what they were getting: a do-nothing, lying, pushover wimp – which is exactly what they wanted. Oh, let me guess, another 10-year plan with trillions of bogus spending cuts, and expired obligations, accounting tricks and lies. Some victory.

    8. Robert says:

      John Boehner is going to fold faster than a cheap, dollar-store chair – just like he did on the spending resolutions. How many people signed the letter (how many conservatives in the House)? Six? Seven? The RINO's that elected Boehner Speaker knew EXACTLY what they were getting: a do-nothing, lying, pushover wimp – which is exactly what they wanted. Oh, let me guess, another 10-year plan with trillions of bogus spending cuts, and expired obligations, accounting tricks and lies. Some victory.

    9. micheal Nelson says:

      real simple budget, folks:
      How much did we take in taxes last year?
      That = our budget to spend this year,

      …including interest payments, wars and disaster relief funds.

      Max, cap, amendment, whatever that's all there is period. You want to do more spending during your administration, then grow the economy, stupid and the people will reward you with their (more) tax dollars and their votes.

      It is the major defining difference between conservative plans and liberal plans HOW to balance the budget.

      Most Conservatives know the way to go is to reduce govt, reduce all spending to match revenues. Common fiscal sense: You shouldn't spend more than you take in, no matter what that number is.

      I know average Americans don't like the idea of "tax cuts for the wealthy," but that's what superdrives the economy. All the millionaires+ hold their cash waiting for a profitable opportunity.

      When Reagan lowered taxes, those "rich" people invested in every business idea they could and the economy exploded for ten years. i.e.; By lowering taxes 10% the Fed took in +25% tax revenues for ten years. THATS the way to grow the spendable budget, stupid!

      Me the average guy, once sent off $100 per paycheck in taxes. Under Reagan, it was suddenly less than $90 taken out. I remember it, took my fiance' out to a nice dinner! You can bet we didn't save that, we spent it, which helped the average guy stimulate the economy too!

      Liberals plan is to raise taxes to match their ginormous spending plans.

      Just look at how NObama speaks and writes about it, he says it subtly but essentially "get revenues in line with spending." That means he wants to raise taxes to match his ridiculous budget and fantasies of even more spending. I have no idea why conservatives of every kind haven't pounded out the message pointing that out. I hope once the field thins the mantra will resound from sea to shining sea.

      NObama manages to get away with implying he only wants to raise taxes on the rich, but that's too thin a slice of onion skin to really make a difference. Besides, it will further slow the economy as the people with real money to invest in business decide to hold it for more profitable times. Taking more money out of peoples pockets will slow the domestic spending which IS the economy, stupid.

      Giving Liberals control of the whitehouse and both congress and the senate is like giving a bratty 11 year old a gun and an american express gold. No matter what you want to do its too late to stop them from doing whatever they want.

    10. Oh the NEW THEME>> Cut, Cap & Balance, except where?

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