The Long Road Ahead to Fiscal Responsibility

08 August 2011   Senator Jon Kyl
A new debt ceiling, but no authorization for new spending.

moneytimeCongress recently reached a bipartisan agreement with the president that will significantly reduce government spending, establish a streamlined process for Congress to identify additional savings, and avoid a default on our national debt.

It’s important to first note that most leaders in Washington understood that default on the government’s debt was not an option. A default would have harmed the fragile recovery of our economy and the economic well-being of millions of Americans, affecting everything from mortgage interest rates to the security of pensions and insurance (a default, of course, is much more severe than a downgrade in U.S. debt by one of the credit rating agencies, which has now occurred). President Reagan, when faced with a similar dilemma, argued that the United States “has a special responsibility to itself and the world to meet its [financial] obligations. It means we have a well-earned reputation for reliability and credibility – two things that set us apart from much of the world.”

At the same time, it’s important to understand that raising the nation’s debt ceiling did not authorize a single dime in new spending. In fact, quite the opposite – it simply allowed the government to pay bills already incurred. It’s similar to an individual using his or her credit card to make a purchase, and then later having to pay the bill. Indeed, for individuals and governments alike, fiscal sanity does not mean refusing to pay your bills – it means spending less so you don’t have to borrow to pay your bills.

In the case of our government, that means cutting spending now and adding accountability to keep the lid on in the future. The agreement helps us start to achieve both of these aims. In fact, it sets us on a course that, if we adhere to it, will eventually enable us to balance our budget, draw down our debt, put entitlement programs on a sustainable path, and create the conditions for strong economic growth.

The agreement does this by placing a cap on spending over the next 10 years, which will save $917 billion over that time period, according to the nonpartisan Congressional Budget Office. It also establishes a bipartisan congressional committee to consider entitlement reforms and recommend an additional $1.5 trillion in deficit reduction over the next decade. The agreement would also require both the House and Senate to vote on a balanced budget amendment to the Constitution by the end of this year.

Of course, with Republicans only in control of one half of one branch of the government, my party could not dictate the result or get everything we wanted. There are certainly parts of the deal that I find troubling. For instance, the White House – frustrated that it couldn’t raise taxes – insisted on massive cuts in defense spending and even deeper cuts if Congress fails to adopt the deficit recommendations from the select committee. Mind you, these cuts in defense were not the result of careful planning and analysis – they were just arbitrary percentages promoted by the White House, totally unconnected to national security requirements. The theory was, the consequences of Congressional inaction must be so severe that no responsible Member of Congress could dare allow the result – that we would be forced to accept the select committee recommendations on pain of seeing the U.S. military decimated.

As reckless as this President is to even contemplate, much less threaten, to incapacitate our military, I cannot imagine that the American people would countenance such action. So, as I evaluate the work of the committee, if anyone says to me, “well, remember the trigger is armageddon for the U.S. military,” my response will be, “let’s take that debate to the American people and let them decide.”

Even though the agreement has its drawbacks, it represents a significant first step in changing Washington’s mindset from one of “how much can we tax and spend” to “how much we can save.” The bill that was ultimately signed into the law will not change everything wrong in Washington. It is, at best, a reversal of the tax-and-spend policies advanced by President Obama, with some movement down the road to fiscal responsibility.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his website at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.