Dear Member of Congress:
On behalf of the 362,000 members of
the National Taxpayers Union (NTU), I write to express our views on the
important debate surrounding America’s collision course with the $14.3 trillion
federal debt limit. Decades of reckless spending have brought us to a defining
moment for our nation’s fiscal future. We urge you to take this opportunity to
enact several long-overdue structural reforms that will help prevent a
crippling debt crisis. Without passage
of these reforms, NTU will oppose increasing the debt ceiling.
First, Congress must pass a strong
Balanced Budget Amendment (BBA) to our Constitution and send it to the states
for ratification. The most prominent of these proposals is the “consensus” BBA
introduced as S.J. Res. 10 by Senator Orrin Hatch (R-UT), along with every
other Senate Republican) and as H.J. Res. 56 by Representative Joe Walsh (R-IL).
This measure contains a three-pronged approach to protecting taxpayers: a
simple balanced budget requirement, a supermajority requirement to enact any
tax increase, and a limit to prevent spending from climbing above the post-war
revenue average of 18 percent of Gross Domestic Product (GDP). This structure
would prevent government from growing faster than its citizens’ ability to
afford it, while spurring needed reforms to entitlement programs that threaten
our solvency. Other BBAs with considerable support (and varying approaches to
tax and expenditure control) include H.J. Res. 1 and H.J. Res. 2, both authored
by Representative Bob Goodlatte (R-VA).
However, ratification of a BBA by
the necessary 38 states may take several years. For that reason, it is also
necessary to enact a durable statutory mandate that firmly moves expenditures
downward to the 18 percent equilibrium point our economy can sustain. Senators Bob
Corker (R-TN) and Claire McCaskill (D-MO) have introduced a laudable plan with
somewhat similar aims – the “CAP Act” – which contains strong sequestration
provisions that provide for automatic enforcement of a spending limitation. Considering
that federal revenues have exceeded 20 percent of GDP in only three years since
1940, we recommend a set-point lower than the CAP Act’s 20.6 percent of GDP to
facilitate the essential long-term goal of regularly balanced budgets.
One thing that absolutely must not
be on the table is any form of tax hike on American families or businesses. The
looming federal debt explosion does not stem from a lack of revenues. While receipts
have been depressed substantially by the recent recession, Washington is still raking
in about as much money from taxpayers as it did in 2003 (after adjusting
for inflation). Furthermore, revenue will return to average levels by the end
of this decade even after extension of the 2001 and 2003 taxpayer relief laws
and permanently “patching” the Alternative Minimum Tax so its reach threatens
fewer households. Meanwhile, if some in Congress continue to thwart entitlement
reform and spending restraint, outlays will skyrocket to more than 34 percent
of GDP, a level that would require nearly doubling tax rates across the board
to reconcile solely through revenues. That huge tax increase would be futile,
since boosting burdens to this degree would put the country’s economic
performance in a negative feedback loop. In short, the path of spending
restraint simply means maintaining a government as large as its average over
the past six decades, while the path of tax hikes means an unsustainable expansion
of Americans’ tax bills and failure to make the prudent structural changes that
are essential to prevent huge growth in government programs. That is why NTU
will vigorously oppose any kind of a “debt trigger” that includes or allows any
tax increase requirement.
The fight for fiscal responsibility
will not end with the debt ceiling vote. The debt limit problem requires
squaring our long-term obligations with our ability to meet them, but Congress
must not overlook the urgent need for near-term reforms as well. For example, the
House Republican Study Committee (RSC) improved upon the solid foundation
constructed by Representative Paul Ryan’s (R-WI) budget with a spending outline
that would reform entitlements and achieve balance by the end of the decade
without tax hikes. NTU recently joined with the liberal U.S. Public Interest
Research Group to identify more than $600 billion of specific common-sense
reductions in wasteful and inefficient spending that would help meet those
goals. A key part of RSC’s proposal is the complete elimination of the Patient
Protection and Affordable Care Act, last year’s misguided health “reform” bill
that raised more than $500 billion in taxes and included a potentially
unconstitutional mandate to purchase health insurance. Complete repeal of this
law as a necessary part of sustainable reform of our entitlement system.
Because it is expenditures, and not
revenues, that are likely to deviate harmfully from historical norms in the
future, NTU is strongly opposed to increasing tax burdens on hard-working
Americans. However, we strongly support responsible tax reform. As our annual
report on tax complexity, “A Taxing Trend,” shows, our hopelessly complex and
bloated Tax Code imposes over $250 billion in annual compliance costs and
siphons away more than 7.6 billion hours of productivity from our economy. The
need for fundamental tax reform has never been greater, which is why NTU has endorsed
several specific approaches, such as a national retail sales tax completely
replacing the current Tax Code (H.R. 25) or a flat rate income tax (H.R. 1040).
To begin this vital task, Congress should promptly adopt procedural incentives
such as Representative Goodlatte’s “Tax Code Termination Act” (H.R. 462). Lawmakers
should also seriously consider the simplification proposals put forth by
Representative Paul Ryan (R-WI) in his budget plan. Tax reform must be
revenue-neutral at minimum to keep from adding to tax burdens, but the benefits
of a stable and comprehensible Tax Code to our economy (and in turn the federal
government) would be dramatic.
While some in Washington claim that
not increasing the debt ceiling would be careless, the truth is that the most
negligent action Congress can take would be to add trillions more in debt
without adopting the robust, long-lasting protections that are needed to
prevent a future calamity. If we fail in that mission, there is potential for a
debt crisis that could unfold not in the span of years or months, but in days
as investors in markets all over the world demand huge premiums for holding
American debt or begin walking away from it altogether.
If Congress fails to pass a strong Balanced Budget Amendment and a
strong, credible statutory spending cap to fundamentally alter our
unsustainable fiscal path, NTU will vigorously oppose an increase in the debt
ceiling as irresponsible in the extreme. We also urge that the necessary
conditions for a debt ceiling increase include complete repeal of the Patient
Protection and Affordable Care Act.
Sincerely,
Duane Parde
President 
Letter
