Debt Crisis & the Economic Impact
The high temperatures in Washington shouldn’t be the only heat the White House and Democratic leaders in Congress should be feeling when it comes to the debt crisis. It’s been a record breaking 813 days since the Senate, led by Harry Reid, has done their job and passed a budget.
By failing to legislate and enact spending cuts, Democrats are jeopardizing our national security. The credit rating agency Moody’s has indicated if budget cuts associated with a debt limit increase are not credible and lead to a balance in the ratio of debt to GDP, then our country will likely face a downgrade on our bond rating. How will this affect you and me? This will mean higher interest rates that will increase the cost of borrowing for credit cards and loans (home and car). If higher interest rates lead to inflation, we’ll all lose purchasing power as costs rise.
This report tells us that raising the debt ceiling alone will not rescue our economy’s credit rating – Congress needs to simultaneously enact enforceable spending cuts. That is why the House passed the Cut, Cap and Balance Act, which is legislation that includes concrete proposals to put our country on a path to stability. Specifically, this legislation prevents future Congresses from spending more than they take in by putting annual spending caps into law that bring spending into line with the historic average. According to a CNN poll, the American people are in favor of raising the debt ceiling if substantial spending cuts and caps on future spending were approved.
This idea is similar to one proposed by Senator Corker in his CAP Act, of which I am a cosponsor in the House. The legislation would set an across-the-board, binding cap on all federal spending and bring spending down from the current level, 24.7 percent of GDP, to the 40-year historical average level of 20.6 percent. To achieve this level, it would require evenly distributed cuts throughout the federal budget. Most importantly, the CAP Act would ensure money raised for Social Security is not used to pay for other federal spending, which would stop the dishonest tactic of simply providing the Social Security trust fund IOUs for all the money that has been borrowed.
Since March 1962, the debt ceiling has been raised 74 times, which proves our country needs more accountability. The Cut, Cap and Balance Act requires Congress to send a Balanced Budget Constitutional Amendment to the states, which, in my view, is the most important long-term reform we can achieve. If we want to prevent the problem we face today from constantly reoccurring, Congress must pass a Balanced Budget Amendment. Almost every state, including Tennessee, is required to balance their budget, and it’s time Congress do the same.
I also want to make sure we ensure our most important obligations are paid in case the debt ceiling is reached. We need to prioritize pay for our troops, safeguard our seniors and prevent default to our bondholders. This is why I am a cosponsor of the Prioritize Spending Act, which guarantees that, regardless of the outcome in the debt crisis, our brave servicemen and women, our seniors and our bondholders will be taken care of.
I came to Congress to get our nation back on track and that includes making the tough decisions that will put us on a path to prosperity. I urge the Senate to join House Republicans and pass legislation that will get our nation out of this debt crisis and move our economy towards economic recovery.