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Boehner’s Debt Ceiling Plan Fails “Cut, Cap, Balance” and Financial-Market Tests, Taxpayer Group Contends
July 26, 2011
By Pete Sepp
(Alexandria, VA) – The 362,000-member National Taxpayers Union (NTU) stated today that House Speaker John Boehner’s (R-OH) two-step plan to raise the debt ceiling not only fails to adhere to the “Cut, Cap, and Balance” strategy House leaders have said they support, it may deliver insufficient deficit reduction to prevent a downgrade of America’s credit rating.
“The language of the plan released last night does not, despite claims to the contrary, adequately meet the principles laid out by the ‘Cut, Cap, and Balance’ coalition, in which NTU has been a key participant, or the legislation of the same name that has passed the House,” said Andrew Moylan, NTU’s Vice President of Government Affairs.
As Moylan noted, the short-term cuts envisioned in the Speaker’s plan amount to only $6 billion next fiscal year, allowing for $24 billion more spending than envisioned in the budget resolution drafted by Representative Paul Ryan (R-WI). This is a far cry from the $111 billion in near-term reductions contained in the House’s Cut, Cap, and Balance legislation.
Furthermore, the Boehner proposal’s spending cap only applies to “discretionary” (i.e., non-entitlement) outlays and even then allows budget growth at half the rate of inflation, rather than limiting expenditures as a percentage of the economy. And while it does not contain any immediate tax increases, the committee it establishes for the second phase of the plan contains no prohibition on tax hikes and would leave taxpayers vulnerable to such burdens by limiting debate and amendments on the floor.
“Perhaps worst of all,” Moylan continued, “this package does nothing constructive to advance the cause of passing a Balanced Budget Amendment (BBA) to our Constitution that would insulate taxpayers from Washington’s recklessness.” The bill does require a vote on a BBA, but that is something the Speaker could schedule largely whenever he chooses. Most importantly, the debt ceiling increase is not contingent upon its passage.
The whole purpose of the debt ceiling debate has been to achieve a course correction that will allow the federal government to avoid the economic damage of a downgrade. What should really terrify Members, according to Moylan, is the very real prospect that even enactment of the Boehner plan, which may prove a career-ender for lawmakers who promised bolder action, will not be enough to fend off a downgrade in our nation’s credit rating this week. This is yet further evidence that the only plan written in legislative text that can pass the House and maintain America’s AAA-rating is the Cut, Cap, and Balance Act, which has been stymied by Senate Majority Leader Harry Reid (D-NV).
“Harry Reid said he didn’t want to ‘waste time’ on the Cut, Cap, and Balance Act,” Moylan concluded. “It is now clear that the Senate instead is wasting its best opportunity to solve the debt problem: passing the very same Cut, Cap, and Balance legislation it was too quick in dismissing.”