Calling it “the Ryan Plan on steroids” White House officials held a conference call this afternoon concerning Republican proposals to extort huge spending cuts as part of debt ceiling negotiations. This followed this statement issued by the White House earlier in the afternoon:
STATEMENT OF ADMINISTRATION POLICY
H. R. 2560 – Cut, Cap and Balance Act of 2011
(Rep. Chaffetz, R-UT, and 87 cosponsors)
The Administration strongly opposes H.R. 2560, the “Cut, Cap and Balance Act of 2011.” Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility. Increasing the Federal debt limit, which is needed to avoid a Federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions. Instead of pursuing an empty political statement and unrealistic policy goals, it is necessary to move beyond politics as usual and find bipartisan common ground.
The bill would undercut the Federal Government’s ability to meet its core commitments to seniors, middle-class families and the most vulnerable, while reducing our ability to invest in our future. H. R. 2560 would set unrealistic spending caps that could result in significant cuts to education, research and development, and other programs critical to growing our economy and winning the future. It could also lead to severe cuts in Medicare and Social Security, which are growing to accommodate the retirement of the baby boomers, and put at risk the retirement security for tens of millions of Americans.
Furthermore, H. R. 2560 could require even deeper cuts, since it conditions an increase in the Federal debt limit on Congressional passage of a Balanced Budget Amendment. H. R. 2560 sets out a false and unacceptable choice between the Federal Government defaulting on its obligations now or, alternatively, passing a Balanced Budget Amendment that, in the years ahead, will likely leave the Nation unable to meet its core commitment of ensuring dignity in retirement.
The President has proposed a comprehensive and balanced framework that ensures we live within our means and reduces the deficit by $4 trillion, while supporting economic growth and long-term job creation, protecting critical investments, and meeting the commitments made to provide economic security to Americans no matter their circumstances. H.R. 2560 is inconsistent with this responsible framework to restore fiscal responsibility and is not an appropriate method of reducing the Nation’s deficits and debt. The Administration is committed to working with the Congress on a bipartisan basis to achieve real solutions.
If the President were presented this bill for signature, he would veto it.
The White House says the Cut, Cap and Balance Act would not only enshrine the Ryan Plan into law but greatly expand it through a Balanced Budget Amendment. The trouble is the proposed Amendment wouldn’t simply require a balanced budget every year but would require fixed spending caps resulting in $400 billion in cuts every year. Non defense federal programs would be cut 12% per year and programs such as clean energy development would see cuts of 70%. There would be a one third cut for infrastructure spending when the need is critical for such investment and is essential for expanding jobs and kick starting the stalled economy.
The fact is we need increased spending funded by tax increases on the rich and corporations rather than spending cuts. The stalling economy and falling employment figures are the direct result of forced budget cuts imposed by the Republican minority. The total absence of leadership from President Obama on this is shocking.
I had several questions to ask during the call but didn’t get the opportunity. I’d like to know if there are any changes to Social Security, why the President doesn’t simply send a clean up or down debt ceiling bill to Congress for an on-the-record vote, and what the national security implications are of a default and its resultant depression.
A default, of course, would be unconstitutional and the Tea Party radicals insisting upon it must have discarded their precious copies of that document. How easily they dismiss it when it doesn’t suit them. Failure of the United States to pay its obligations, ones made by Congresses and GOP Presidents (93% of our debt was rung up by Reagan and the Bushes) means a sharp increase in the cost of our obligations. This may come sooner than August 2nd if the ratings agencies don’t foresee a solution. As interest rates on our Treasury Bonds rise so will interest rates for everything else since they are all tied together. Consumer credit, home mortgages, auto loans and every other type of loan will begin to increase dramatically.
Just as our auto industry is seeing a healthy revival we’ll kill it and execute what is left of the housing and real estate industries. All the money spent stimulating the economy and turning us around from the brink will have been for naught.
The proposed Balance Budget Amendment is dangerous. If we were to fall into another Great Depression there would be no way to end it, no way to borrow funds to defend the country if we were attacked. If another World War were to occur we’d be defeated immediately due to a failure to be able to mobilize. A default will turn the United States into a Third World country.