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Responsibly Confront the National Deficit

Blog Post
July 1, 2011By Chuck Sheketoff

Now that the gavel has come down on the 2011 Oregon legislative session, Oregonians striving to revive the American Dream must now turn their focus to Washington, D.C. Congress is mulling policies that will have a decisive impact on whether our nation will rebuild and expand the middle class — or whether insecurity and poverty will deepen and widen.

Among the most pressing questions is whether Congress and the White House will confront the nation’s deficit in a responsible way.

The Hatfield lesson

Oregon's legendary Mark Hatfield recognized 16 years ago that amending the U.S. Constitution to require a balanced budget was nothing more than a dangerous “gimmick.” He put principle ahead of politics as the lone Republican voting against a balanced budget amendment proposal floated as part of the Contract with America. The whole nation took note as it proved to be the deciding "no" vote.

Our delegation today needs to remember Hatfield’s heroic vote as they consider the current congressional Republican proposal to enact a balanced budget amendment.

As OCPP recently commented, a balanced budget amendment would sew into the Constitution an economic straitjacket that would leave our nation largely helpless in fighting recessions. Why?

Because in a recession, consumers and businesses cut back their spending out of necessity or fear, stunting economic activity. The only entity with the ability to stimulate the economy is the federal government . . . unless a balanced budget shackles its ability to spend.

And because tax collections plummet during a recession, balancing the nation’s budget would require Congress to slash spending, raise taxes or both — just when the economy is weak. Deep spending cuts in a recession are the exact opposite of what good economic policy would advise. The result would be deeper and longer recessions, greater unemployment and more misery for the American people.

Worse, the current balanced budget amendment legislation is more dangerous than previous versions, containing two destructive provisions:

First, it would require a two-thirds majority vote to raise taxes, which would make it exceedingly difficult to raise revenue to balance the budget, leaving spending cuts as the only practical option.

Second, the bill would cap annual federal spending at 18 percent of the Gross Domestic Product starting in 2018 — an arbitrary level that would force draconian cuts to the programs that nurture the middle class and protect vulnerable Americans.

Spending caps are astonishingly bad

The misguided idea of imposing a spending cap has surfaced in other ways. Indeed, some in Congress have conditioned their support for raising the debt limit on the enactment of a cap on total federal spending.

Like a balanced budget amendment, a cap on federal spending “is an astonishingly bad idea” that would “prolong and deepen recessions and deny essential public services to those in need,” according to the Center for American Progress.

First, draw a “Circle of Protection,” again

By slashing those services that nurture the middle class and protect the vulnerable, the balanced budget amendment and spending cap proposals would exacerbate poverty — a grave departure from previous, bipartisan deficit-reduction compromises, which have made sure that such efforts do not increase poverty. That's the message that leaders of prominent national religious, civil rights, charitable, economic research, and low-income advocacy organizations have delivered to Congress and the White House. They have asked lawmakers to draw a "Circle of Protection" around programs that meet the basic needs of low-income people.

There are responsible ways of addressing the nation’s deficits without exacerbating poverty and inflicting such pain on America’s beleaguered middle class.

Then, turn to taxes

The responsible approach begins by undoing a key driver of the increasing deficits: the Bush-era tax cuts. Simply letting those tax cuts — which have disproportionately benefited the nation’s wealthiest households — expire as scheduled by the end of 2012 would halt the rise in the deficit over the next decade. Congress should then build on the accomplishments of the Affordable Care Act to address the other primary deficit-driver, the spiraling costs of health care.

These decisions will greatly affect the future well-being of Oregonians, so it’s vitally important that we demand of our congressional delegation to address the national deficit in a responsible way.


This blog post was originally posted on www.blueoregon.com on July 1, 2011. The original post can be found at http://www.blueoregon.com/2011/07/responsibly-confront-national-deficit/.