Statement of Senator Mike Enzi
On the Cut, Cap, and Balance Act
July 21, 2011
Mr. President. We have spent a considerable amount of time discussing the debt and deficit crisis the country is facing during the 112th Congress. Although we have heard from the President that we must raise the debt limit, neither he nor any of his Democratic colleagues, with the exception of the three Senators in the “Gang of six”, have presented us with a concrete plan to rein in spending and get our fiscal house in order. Meanwhile, every day we are spending more money we just don’t have. While my Democratic colleagues continue to talk about the need to increase the debt limit and get our fiscal house in order, the House of Representatives has taken concrete action to make that happen.
On Tuesday night, 234 members of the House joined together to pass the Cut, Cap, and Balance Act. The bill will put the country on a sound fiscal course, at the same time it gives the President the $2.4 trillion in additional borrowing authority that he has asked us to provide. The problem we currently face is that we are spending too much money and borrowing too much money. I agree with our colleagues in the House that it only makes sense for us to increase that borrowing authority if we have put the country on a path where that borrowing will eventually end.
The Cut, Cap, and Balance Act takes a three tiered approach to righting our fiscal ship. First, it provides some substantial, but reasonable cuts to spending immediately. The bill requires us to cut about 3 percent in spending from the bloated federal budget next year. That cut amounts to more than $100 billion in spending next year. The bill allows the House and Senate to determine where those cuts are most appropriate, and because we recognize the need to cut in appropriate areas, the Cut, Cap, and Balance Act ensures that there are no immediate cuts to Social Security, Medicare, veteran’s benefits or military salaries.
At the same time we cut spending, the bill puts in place spending caps that prevent us from spending above a specific amount and puts our spending trajectory on a path where we can achieve a balanced budget. We all wish that we could balance the budget tomorrow, but we are spending money at such an alarming rate, that just isn’t achievable. This bill recognizes that fact and gradually caps spending so we can achieve balance.
Finally, the bill gives the President the ability to borrow the additional $2.4 trillion he is requesting, subject to one condition – that Congress passes a Balanced Budget Amendment. We all agree that we need to stop borrowing so much money. The only way to stop borrowing is to have a balanced budget. A balanced budget means that we are not spending money we don’t have. Therefore, if the President wants to borrow $2.4 trillion more dollars from countries like China, we need to know that we won’t be forced to borrow money forever. Cut Cap and Balance does not ask for the time for states to ratify a balanced budget amendment after we pass it. Their time to ratify gives us time to get where we need to go. Like families across America, we are going to have to decide what spending is essential. Families have as many ideas for spending money as the Federal Government has – but they know that is not an option. They have to decide what is essential as opposed to “nice to have”.
I think it is important to take a look at the problem we are facing - if you grasp the size of the problem, you’ll share my sense of urgency that we must pass the Cut, Cap, and Balance Act. Our national debt is around $14.3 trillion dollars. Our national debt is almost equal to the whole economy of the United States! That means that, if we were to pay off the debt, every man, woman, and child in this country would need to write a check for more than $46,000.
It would be one thing if that number were projected to decrease or if there were signs we were making progress in bringing our budget back into balance, but that’s not happening. Since the President took office in 2009, our national debt has increased by more than $4.4 billion each day for a total increase of approximately $3.7 trillion. I can already hear the President counter that he had a lot to clean up. At what point when things are getting worse instead of better is the President going to take ownership and provide a solution on paper. The stimulus didn’t work – so let’s not repeat it. If you keep doing what you have been doing you shouldn’t be surprised when you wind up with the same result. Margaret Thatcher, when she was Prime Minister proved that putting the fiscal house in order increased the economy.
In 2011, we are expected to spend $3.6 trillion dollars. At the same time we spend $3.6 trillion, we will have revenues of $2.2 trillion. That’s a $1.4 trillion deficit. If we follow the President’s budget, we will have a deficit next year of $1.2 trillion. The ten-year average - if we follow the President’s budget proposal - is nearly $1 trillion in deficits each year. After his first term, the President’s policies are expected to add almost as much debt held by the public as all other presidents in U.S. history combined.
That level of deficit cannot be sustained and contrary to the opinions of my friends on the other side of the aisle, we cannot tax our way out of this problem. Failure to live within our means does not warrant taxing the taxpayers for Washington’s failures. According to the Congressional Budget Office, the top 20 percent of income earners paid almost 86 percent of all federal taxes in 2007. Those individuals are the job creators in the country. Many of them are small businesses who reinvest the profits they make back into their businesses to make them grow. Increasing their taxes at a time of economic struggle will cost jobs and will lead to more unemployment and higher deficits. Businesses are already reluctant to expand because of the increasing and detrimental regulations coming every day out of this administration. Some of the regulations aren’t from current law so they can be fought in the courts and overturned – but at great expense and usually over a period of five years while experiencing more pain than any cuts we might make.
Rather than increasing taxes, we need to cut spending and reform entitlement programs. Mandatory and entitlement programs now account for 62 percent of all federal spending and that number continues to rise as the baby boomer generation retires. By comparison, mandatory and entitlement programs accounted for 33 percent of all federal spending in 1964. The numbers don’t lie. Entitlement programs are placing a stranglehold on our budget, and yet, there are still calls from my colleagues on the other side of the aisle to keep them as is. Misinformation from campaigns of outside groups say there isn’t a problem and suggest we can fix our budget problems simply by cutting earmarks and finding waste, fraud, and abuse. That’s just not true. Even if the money from the Social Security Trust fund that has been spent were returned, the length of time a person now lives makes the fund actuarily broke.
These problems are too serious for us to ignore them. Erskine Bowles, the co-chairman of the Deficit Commission, said it best when he testified that “We are facing the most predicable crisis in our nation’s history.” Everyone knows that we need to take action. Everyone knows that we need to make the tough choices necessary to right our fiscal ship. And, yet, there are some who suggest that we should not act, or that we should wait to act. To those members, I say that we’ve kicked the can down the road long enough. It is time for us to take serious action to change the trajectory of our spending habits and get this country in a condition that we can be proud to leave to our grandchildren.
We have known that this debt limit debate was coming for months. We can all see that the government is spending money at a rate that will require us to authorize the Treasury Department to borrow more money. Although the date has shifted, the fact that the government will breach the debt limit should come as no surprise to anyone. That is why it is so perplexing that the President and my Democratic colleagues have not presented any plans to get the country back on track.
In the House, Republicans passed a budget that would cut spending by $5.8 trillion over the next 10 years. Senator Toomey and Senator Paul presented their own budgets that would get our country back on track. Senator Corker has introduced legislation that would cap spending levels and head us in the right direction.
I have introduced legislation that will require us to reduce spending by 1 percent for 7 years and caps spending each year to balance our budget. Incidentally, that is probably how long it will take the states to ratify the Balanced Budget Amendment. If you are saying, “we can do it without a balanced budget amendment, you could also pass my 1% Solution Bill and prove that we can. A backup plan is always a good idea. Most businesses in the United States have to find a way to reduce spending by 1 percent to match the economy or to do regulations we force on them. Most families have had to find a way to spend one penny less out of every dollar or face a financial crisis. By making the one percent spending cut, we’ll save around $7.5 trillion over the next 10 years, balance our budget, and put our country on a sustainable spending path.
Republicans have offered all of these plans, and we continue to hear only silence from the other side. The only plan presented by the Majority – President Obama’s fiscal year 2012 budget – was unanimously opposed. When the President and the Majority don’t lead, some bill has to take the lead. Members of the House proved that on Tuesday night by passing a plan that allows the President to have his debt limit increase and gets our country back on track.
The Cut, Cap, and Balance Act is a responsible solution to the problem we face. We are spending too much. Too much spending leads to too much borrowing. To rein in spending, we must make immediate cuts that prove Congress can act and we must cap future spending to ensure that our spending levels do not grow to an insurmountable level. To prevent future borrowing, we need to put in place a mechanism that will require us to balance our budget. Forty-nine states require a balanced budget and it is well past time for the federal government to show the same fiscal restraint.
The President has asked us to give him the ability to borrow $2.4 trillion more dollars. That is $2.4 trillion that our children and grandchildren will have to pay back. It is money that we will need to borrow from countries like China who are our competitors in the world and who do not necessarily share our same values. I don’t take that responsibility lightly.
This responsibility requires immediate action to correct the problem and prevent future generations from having to make the tough choices our out-of-control spending has forced us to make. The House took that responsibility seriously and passed the Cut, Cap, and Balance Act to right our fiscal ship at the same time we give the President the borrowing authority he so desires. The United States Senate should follow suit and pass the Cut, Cap, and Balance Act immediately.