Heritage Action: No to Boehner and Reid Plans

Member Group : News Releases

Earlier this summer, Heritage Action for America announced we would be a
"no" on a deal to raise the debt limit "unless a deal rises to the level of
the substantial fiscal challenges which face our nation." Unfortunately,
neither the Boehner Plan nor the Reid Plan meets this criteria and we will
be key voting "no" on any votes on either.

Our nation is in the midst of a fiscal crisis, but it is one that has
nothing to do with an August 2 "deadline" for a deal or President Obama and
Secretary Geithner’s fear mongering over recent days and weeks. The crisis
is one of over $62 trillion in unfunded obligations that are the loudest
warning bell possible of the systemic problems plaguing our nation.
Washington should not ignore or postpone dealing with this problem once

Twice already this year, the House of Representatives has voted for plans
that would address our fiscal crisis and save our nation from a
creditworthiness downgrade. In April, the House passed a bold budget, which
would place our nation on a different, more sustainable and prosperous
course. Last week, the House passed the Cut, Cap and Balance Act, which
would force future Congresses to live within their means and rapidly bring
down our nation’s debt-to-GDP ratio. Unfortunately, both of these
responsible proposals were defeated by an ideological Senate, which has
offered few ideas of its own.

Clearly, the most blame belongs to the President and the Senate – a
President who comes up with no useful fiscal plan of his own and a Senate
that refuses to pass meaningful legislation to save the American dream from
a fiscal tsunami. We cannot, however, continue business as usual by raising
the debt limit without substantively addressing our nation’s fiscal
challenges. The entire purpose of the debt limit is to put an end to
borrowing when it reaches a point that our nation finds unacceptable. There
is no point in having a debt limit if the option of using it to address
overspending and overborrowing is so intimidating that it is unilaterally
taken off the table.

Speaker Boehner’s most recent proposal to raise the debt limit is
regrettably insufficient to our times. Step one of the Speaker’s proposal
would cut $1.2 trillion in discretionary spending. Assuming all of these
cuts materialized, this would reduce our nation’s projected debt at the end
of the decade from $24.9 trillion to $23.7 trillion. Step two would create a
special committee, which has three major problems: (1) The "deficit
reduction" of $1.8 trillion remains insufficient for our times; (2) "Deficit
reduction" is a well-known codeword for "tax increases"; and (3) 17
blue-ribbon panels, commissions and the like since 1982 have gotten our
nation into the mess we are in and there is no obvious reason as to why the
18th will get us out. Further, this proposal would outline a fast track
proposal that unduly limits the rights of the congressional minority.

All in all, under a best case scenario where all of the cuts envisioned in
the Boehner plan come to fruition, they would only reduce our nation’s
projected debt-to-GDP ratio from 104% to 92% – a ratio far higher than its
current 62 percent, which Moody’s has already said must come *down* to
maintain our nation’s stable outlook.

Harry Reid’s proposal to raise the debt ceiling is equally unacceptable. It
appears to be the latest in a line of proposals that began with the
McConnell Proposal, morphed into the McConnell-Reid Proposal, further
deteriorated into the Gang of Six Proposal, and has now resurfaced as the
Reid Proposal. Each of these insufficiently bold ideas would lead to an
increase in the debt limit in exchange for few, if any, actual cuts off
existing spending levels. In normal times we might take these as one step
toward a path of fiscal sanity. But we do not have the luxury of taking
that kind of small first step at this juncture. The rating agencies are
poised to downgrade us within months if we don’t pass something like the
House of Representatives’ first two attempts – the House budget and the Cut,
Cap and Balance Act both of which we key voted "yes." We would urge the
Senate to reconsider both of these bold plans.holler The last thing our
country needs is a clean debt limit increase with some fancy window dressing
to try to fool the American people.

All in all, Heritage Action remains where we were at the start of the
summer: absolutely convinced our nation is in fiscal crisis and certain that
bold political leadership is necessary to save the American dream. Congress
should drive down federal spending on the way to a balanced budget, while
protecting America, and without raising taxes. Unfortunately, that does not
appear to be what we will get from Washington, which has irresponsibly
turned its back on the only real plans out there: The House Budget and the
Cut, Cap and Balance Act. As such, Washington should be forced to live under
the current debt limit until it’s ready to make tough choices – choices that
it should make, and has time to make, this week.


Michael A. Needham
Chief Executive Officer

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