Dear Member of Congress:
On behalf of the 362,000 members ofthe National Taxpayers Union (NTU), I write to express our views on theimportant debate surrounding America’s collision course with the $14.3 trillionfederal debt limit. Decades of reckless spending have brought us to a definingmoment for our nation’s fiscal future. We urge you to take this opportunity toenact several long-overdue structural reforms that will help prevent acrippling debt crisis. Without passageof these reforms, NTU will oppose increasing the debt ceiling.
First, Congress must pass a strongBalanced Budget Amendment (BBA) to our Constitution and send it to the statesfor ratification. The most prominent of these proposals is the “consensus” BBAintroduced as S.J. Res. 10 by Senator Orrin Hatch (R-UT), along with everyother Senate Republican) and as H.J. Res. 56 by Representative Joe Walsh (R-IL).This measure contains a three-pronged approach to protecting taxpayers: asimple balanced budget requirement, a supermajority requirement to enact anytax increase, and a limit to prevent spending from climbing above the post-warrevenue average of 18 percent of Gross Domestic Product (GDP). This structurewould prevent government from growing faster than its citizens’ ability toafford it, while spurring needed reforms to entitlement programs that threatenour solvency. Other BBAs with considerable support (and varying approaches totax and expenditure control) include H.J. Res. 1 and H.J. Res. 2, both authoredby Representative Bob Goodlatte (R-VA).
However, ratification of a BBA bythe necessary 38 states may take several years. For that reason, it is alsonecessary to enact a durable statutory mandate that firmly moves expendituresdownward to the 18 percent equilibrium point our economy can sustain. Senators BobCorker (R-TN) and Claire McCaskill (D-MO) have introduced a laudable plan withsomewhat similar aims – the “CAP Act” – which contains strong sequestrationprovisions that provide for automatic enforcement of a spending limitation. Consideringthat federal revenues have exceeded 20 percent of GDP in only three years since1940, we recommend a set-point lower than the CAP Act’s 20.6 percent of GDP tofacilitate the essential long-term goal of regularly balanced budgets.
One thing that absolutely must notbe on the table is any form of tax hike on American families or businesses. Thelooming federal debt explosion does not stem from a lack of revenues. While receiptshave been depressed substantially by the recent recession, Washington is still rakingin about as much money from taxpayers as it did in 2003 (after adjustingfor inflation). Furthermore, revenue will return to average levels by the endof this decade even after extension of the 2001 and 2003 taxpayer relief lawsand permanently “patching” the Alternative Minimum Tax so its reach threatensfewer households. Meanwhile, if some in Congress continue to thwart entitlementreform and spending restraint, outlays will skyrocket to more than 34 percentof GDP, a level that would require nearly doubling tax rates across the boardto reconcile solely through revenues. That huge tax increase would be futile,since boosting burdens to this degree would put the country’s economicperformance in a negative feedback loop. In short, the path of spendingrestraint simply means maintaining a government as large as its average overthe past six decades, while the path of tax hikes means an unsustainable expansionof Americans’ tax bills and failure to make the prudent structural changes thatare essential to prevent huge growth in government programs. That is why NTUwill vigorously oppose any kind of a “debt trigger” that includes or allows anytax increase requirement.
The fight for fiscal responsibilitywill not end with the debt ceiling vote. The debt limit problem requiressquaring our long-term obligations with our ability to meet them, but Congressmust not overlook the urgent need for near-term reforms as well. For example, theHouse Republican Study Committee (RSC) improved upon the solid foundationconstructed by Representative Paul Ryan’s (R-WI) budget with a spending outlinethat would reform entitlements and achieve balance by the end of the decadewithout tax hikes. NTU recently joined with the liberal U.S. Public InterestResearch Group to identify more than $600 billion of specific common-sensereductions in wasteful and inefficient spending that would help meet thosegoals. A key part of RSC’s proposal is the complete elimination of the PatientProtection and Affordable Care Act, last year’s misguided health “reform” billthat raised more than $500 billion in taxes and included a potentiallyunconstitutional mandate to purchase health insurance. Complete repeal of thislaw as a necessary part of sustainable reform of our entitlement system.
Because it is expenditures, and notrevenues, that are likely to deviate harmfully from historical norms in thefuture, NTU is strongly opposed to increasing tax burdens on hard-workingAmericans. However, we strongly support responsible tax reform. As our annualreport on tax complexity, “A Taxing Trend,” shows, our hopelessly complex andbloated Tax Code imposes over $250 billion in annual compliance costs andsiphons away more than 7.6 billion hours of productivity from our economy. Theneed for fundamental tax reform has never been greater, which is why NTU has endorsedseveral specific approaches, such as a national retail sales tax completelyreplacing 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 incentivessuch as Representative Goodlatte’s “Tax Code Termination Act” (H.R. 462). Lawmakersshould also seriously consider the simplification proposals put forth byRepresentative Paul Ryan (R-WI) in his budget plan. Tax reform must berevenue-neutral at minimum to keep from adding to tax burdens, but the benefitsof a stable and comprehensible Tax Code to our economy (and in turn the federalgovernment) would be dramatic.
While some in Washington claim thatnot increasing the debt ceiling would be careless, the truth is that the mostnegligent action Congress can take would be to add trillions more in debtwithout adopting the robust, long-lasting protections that are needed toprevent a future calamity. If we fail in that mission, there is potential for adebt crisis that could unfold not in the span of years or months, but in daysas investors in markets all over the world demand huge premiums for holdingAmerican debt or begin walking away from it altogether.
If Congress fails to pass a strong Balanced Budget Amendment and astrong, credible statutory spending cap to fundamentally alter ourunsustainable fiscal path, NTU will vigorously oppose an increase in the debtceiling as irresponsible in the extreme. We also urge that the necessaryconditions for a debt ceiling increase include complete repeal of the PatientProtection and Affordable Care Act.
Sincerely,
Duane Parde President