House Republicans Offer Balanced Fiscal Cliff Plan
Days after President Obama presented his opening offer in the fiscal cliff negotiations, House Republicans presented our counterproposal as the next step in the process toward reaching consensus before the December 31st deadline. Unlike President Obama's proposal, which reads like a Christmas wish list of liberals' most extreme ideas, the Republican plan is based on both reality and on common ground the two parties have established in previous discussions.
Our balanced plan is based on recommendations from Erskine Bowles, former Clinton adviser and co-chair of President Obama's own debt commission. Consistent with Speaker Boehner's pledge to put new revenue on the table, the plan includes $800 billion in tax revenue. The key difference is that our plan would achieve revenue through reforms to the outdated tax code, not through the increased tax rates on which the president continues to insist.
The next major difference is on the key issue of spending cuts. Conservatives continue to repeat "we have a spending problem, not a revenue problem" because it is true. Our national debt is $16 trillion and growing, and our children and grandchildren will pay the greatest price if we fail to get it under control. The share of the national debt for each child in America is $51,000 today and is on track to increase to $69,000 per child by 2016. The interest payment alone for our debt is $220 billion this year and will balloon to $778 billion by 2020, according to Congressional Budget Office projections. This context makes it that much more astonishing that President Obama's plan includes only $400 billion in spending cuts. His plan also boasts "savings" that have either already been enacted or identified as phony each and every time they've been trotted out. For instance, the president's plan claims $800 billion in savings over 10 years through cuts to war spending that was never allocated in the first place. Advertising spending cuts based on expenditures never included in any budget is an absurdity George Will likens to saving "$800 billion by deciding not to build a ski resort on Mars."
By contrast, the Republican plan would achieve $1.1 trillion in savings through reforms to almost-bankrupt entitlement programs plus an additional $300 billion in cuts to discretionary spending. All in all, the Republican plan would save $2.2 trillion through cuts to wasteful spending and overdue structural reforms to entitlement programs and the tax code.
Although media headlines have been dominated by the debate over tax rates, spending is the real issue. Even if President Obama obtained the entire $1.6 trillion in tax increases he's demanding, which is double the $800 billion increase on which he campaigned, the budget still wouldn't come close to balancing. Especially given the president's track record for amassing historically unprecedented yearly deficits of more than $1 trillion during each year of his presidency.
The Republican plan is a good-faith effort to reach bipartisan consensus with the president while addressing the real issue underlying the fiscal cliff: our massive national debt. As President Obama and Speaker Boehner continue negotiations, the president must understand that any proposal that does not include significant spending cuts is not a serious effort to solve the fiscal cliff.