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  • Morning Bell: America Needs a Better Solution

    Americans tuning in last night to watch President Barack Obama’s primetime address from the East Room of the White House might have thought they stumbled upon yet another re-run from the networks. Instead of hearing news that Washington finally broke the debt ceiling stalemate, viewers were treated to more of the same from their President. He still had no plan for dealing with government overspending and overborrowing, and he repeated his never-ending call for tax hikes. Unfortunately, the plans proposed by House Speaker John Boehner (R–OH) and Senate Majority Leader Harry Reid (D–NV) don’t get the job done, either.

    The President’s speech came as America stands at a fiscal precipice, with just a week to go before the August 2 deadline to raise the debt ceiling. Though the credit rating agencies see America’s risk of default as small (though increasing), there remains the other, more serious risk–the failure to do enough to bring down debt in order to avoid a downgraded credit rating. Standard and Poor’s warns that Congress and the Administration:

    [Might] agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

    Boehner and Reid have both offered proposals to raise the debt limit in order to avoid default, but their plans leave too much undone. Of the Boehner plan, Heritage’s Alison Fraser writes that though the proposal would cut $1.2 trillion in discretionary spending, there’s no guarantee that those cuts will occur, its results would offer only modest reductions in publicly held debt under the best scenarios, and the plan would do nothing to reform entitlements—the real driver of our deficits in the future. Meanwhile, the Reid plan falls short of Boehner’s by $800 billion. In short, neither plan does enough to reduce America’s debt, and neither would address the concerns raised by the credit rating agencies. Fraser explains:

    Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

    Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate.  Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs.  And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.

    Last night, when President Obama attempted to explain the nation’s debt problems, he said that every family knows that “a little credit card debt is manageable.” With $14.294 trillion in debt, the President grossly understates the problem—and he forgets that Americans are well aware of Washington’s spending addiction.

    Half measures, though, won’t solve America’s debt crisis. They won’t fool the credit ratings agencies, and they won’t satisfy the American people. Heritage’s David Addington writes, “Forget the McConnell, McConnell–Reid, Coburn, Gang-of-Six, Boehner, and Reid plans.  Go with the American plan — cut government spending, deeply and right now, for the good of the country.” That’s good advice for our leaders in Washington, no matter which side of the aisle they fall on.

    Quick Hits:

    Posted in Economics [slideshow_deploy]

    34 Responses to Morning Bell: America Needs a Better Solution

    1. Frank says:

      The Republican leadership in Congress is, as expected, wimping out and not listening to the American voters or its Tea Party supporters in the last election cycle. The Republican Party is in danger of heading for the ash bin of history. We will then be left with one "big government" party: the Democratic Party. Some sort of new third party coalition will form as the "small government" party alternative.

    2. bill says:

      One of few articles by Heritage that is balanced. Stop thinking Republican v, Democrat – and focus on the right outcome for the country. That is the kind of thinking we need. Well done.

    3. Ralph A. Hunt says:

      Right, you and I are on different pages. American, 9 years active military, dedicated patriot; and I cannot agree with your censure and editing.

    4. R. Joe Dunnam says:

      You are right in that neither of these proposals do anything but kick the ball down the road with promises. I do not believe we will get any significant changes until congress, not only hears that the American public is talking about term limits, but is actually going to force a vote on them. With term limits the congress will have time for the peoples work and not have to pander to special interests and raise money for reelections, continuously. Wouldn't that be a nice changes?

    5. Donald McGovern says:

      Congress doesn't have the courage to make the cuts that are necessary; and the President believes in more expenditures and more government control of American lives.

    6. The Farmer says:

      THE President HAS A PLAN !!!! It is to destroy our country!!!! He has nothing but distain for our country, anyone paying attention to what he is doing rather then what he says will plainly see that.
      The question is why do the Democrats and the RINO'S go along with him? Its the economy stupid, not our economy but their economy, they are ALL geting rich off from us.

    7. John says:

      America is like a healthy body and its resistance is threefold: its patriotism, its morality, and its spiritual life. If we can undermine these three areas, America will collapse from within.
      Stalin

    8. Bobbie says:

      please? It makes sense…
      i think.

    9. Pete Houston says:

      The President continuously repeats that their is no plan. I do believe him that their is no plan that he is willing to share with the general public. I am sure that the Democratic leaders and their controllers have a very definite plan. It is either that, or they are totally inept. At this point, I believe either story is possible.

    10. Lindsey says:

      "Instead of hearing news that Washington finally broke the debt ceiling stalemate, viewers were treated to more of the same from their President. "
      And then we read more of the same from the Heritage Foundation……your message is even staler than his, your policy recommendations are wrong. Offer your services to Derek Fisher and the NBA players and see if your policy recommendations work for them. If your policies are actually accepted and then they work, well, I'll relook at your message.

    11. Allen Wilson says:

      Government spending is not the cause of our problem. It started with the collapse of the financial sector and the call for bailouts of the big banks and insurance company AIG. Our refocus on the subsequent need for huge inflationary Government spending is an attempt to keep the economy upright in the tidal wave of bank insecurity.

    12. mred says:

      All it would take to balance the US budget is for the USA to get out of all the foriegn countries that they have sites in and shut down the wars in the middle east

      The original signers of your Constitution recognized the fact that they should NOT get themselves involved with other countries problems..

      I dont know how many trillions of dollars these useless wars have cost(never mind good young American lives) but if they were stopped and the troops deployed along the Mexico border you can be sure it would stop illegals and drug and gun smuggling from the US and Mexico ?

      With orders to shoot to kill any illegals it wouldnt taker long for the Coyotes and people smugglers and smugglers of all kinds to get the message

      Also stop illegals and legal Mexican and other aliens from transferring funds from the US to their homelands.

      If that money were to stay in the US it would certainly boost the economy.

      In short, it isnt rocket science although Obama seems to make it so ?

    13. Ron W. Smith says:

      I agree with Addington. Cut spending deeply, and include National Security when that's done. More than $1 trillion a year on it with borrowed money and while running an annual deficit of over $1.5 trillion are figures ripe for close inspection and even closer inspection of foreign policy decisions behind the extravagance.
      A tax hike on the top 1-2% of wage earners would be a step toward equitable solution to our fiscal woes, too.

    14. hotnike says:

      I sat outside and read a book last night during Obama's talk. I guess I didn't really miss anything important.

    15. Leith Wood says:

      Good article. Stop spending now.

    16. Carl says:

      It was apparent last night that the President is not willing to "reach across the aisle" or "eat his peas." He in essence told Congress it is his way or no way.

    17. RogCol says:

      Standard stump speech. He didn't even bother to refine it. His teleprompter is getting lazy.

    18. paul collins says:

      WHY?

    19. F.D. O'Toole says:

      Spending by the Federal Government skyrocketed with the seating of the Democrats in 2008 – 2009. It went from a relatively steady 19% of GDP during the earlier Bush years to 25% of GDP. That's just a few years and the simple solution is to cut the new spending back to 2007 levels.

    20. Joan says:

      Re: "America Needs A Better Solution" –America needs a better (and more competent) President.

    21. Curt Krehbiel says:

      Our national debt has been caused by both parties but has been drastically increased during the current regime. The interest on the debt is currently requiring 41 percent of the total income (taxes) to the government. At this rate of increase it will soon be unmanageable as raising taxes to pay the interest will destroy the economy and the tax payers. The solution will be to start now to get rid of many departments that produce nothing. Energy, Education, Commerce, ad infinitum. Being rid of these leeches will provide money to support such programs as Social Security and Medicare. The individual must be raised and taught that many things in life are his own responsibility. The government cannot be everyone's crutch.

    22. kaydell bowles says:

      I listened to President speech and it was a campaign and a cover his backside. Let us call for sake to the country, ourselves, and our posterity, tell Congress to stop the spending and take the cuts necessary. If not we will pay more dearly down the road. We can pay now or we will pay later but the later payment will be much more drastic than we will ever imagine.

    23. George Colorado says:

      We don't even have a budget foe 2012? What are the "cuts" measured against?

    24. Lorna says:

      I don't think D.C. is listening, they only have ears for themselves. We MUST wait and get "cut,cap and balance" or the new plan by Rand Paul "the pennys plan" it REALLY seems to do all we want and need to get the country back in order.

    25. Clearhead says:

      “….no matter which side of the aisle they fall on.” is quite correct. If Congress continues failing to do the job for which they were elected, then yes! They will be falling on both sides of the aisle, the center of the aisle, in the gutter and wherever they turn. ALONG WITH THE ENTIRE UNITED STATES OF AMERICA. God help us!

    26. FOCUS ON FREEDOM says:

      FOCUS ON FREEDOM and nullify every increase in expenditures since January 20, 2009.

    27. Blair Franconia, NH says:

      We need Cut, Cap, and Balance.

    28. robert ackert says:

      Cut everything ten percent and no debt limit increase. When all is said and done much is said and little done.

    29. Carol Copeland says:

      I print out "The Morning Bell" every day for my husband as he doesn't get on the computer. I really wish as I am doing this, that I did not have to waste my ink on a picture of our president!

    30. KC - New Mexico says:

      A key issue discussed yesterday with a group of engineers was that Washington lacks leadership vision. It is the President’s job to communicate a big picture vision for this country and it is Congress’s job to implement the vision. A systems thinking business leader or systems engineer type would greatly benefit this position. Same-old politics is proving to not be the answer. We cannot build this great country when we have political leaders who leave the game and take their ball because they are loosing. Running this great country is like running a giant enterprise made up of various functions with a bottom line focus on its customers. We need real leadership. The current liberal leadership that is primarily from the legal function just does not get it. Yes we can, and yes we must change in 2012!

    31. The truth is reached the limit of neglect and now is when actual policy decisions must be made is where you see what kind of policies are and what kinds of policies to improve the country hacn and care for your future.

    32. Pingback: Heritage: America Needs a Better Solution | Congress Arizona

    33. Pingback: Millennials, Citing National Debt, Fear for America’s Future

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