Tuesday, July 26, 2011

Charge and Response: President Obama’s Primetime Address

Here is the GOP Conference response to the President's address last night.

Last night, President Obama issued a primetime address, telling the country he’s not going to “bore” them with the details of every plan – probably because he still doesn’t have one. Instead, the president stuck to the same class warfare rhetoric and embraced the plan put forward by Senator Harry Reid that gives him the immediate debt limit increase he wants, more budgeting gimmicks, and no reforms to restrain future spending. Below please find a rough transcript of some of the president’s claims with responses to help you correct the record.

Charge: “For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.”

Response: What were yearly deficits when Republicans were in charge have become monthly deficits under President Obama. When Republicans controlled the House from 1995 through 2006, the average annual deficit was $96 billion. While Democrats controlled the House from 2007 through 2010, average monthly deficits were $75 billion and since President Obama took office the average monthly deficit has been $111 billion.

Charge: “But today, many Republicans in the House refuse to consider this kind of balanced approach – an approach that was pursued not only by President Reagan, but by the first President Bush, President Clinton, myself, and many Democrats and Republicans in the United States Senate.”

Response: President Obama is no Ronald Reagan, and the economic stats prove it. And Reagan supported a balanced budget amendment: “Only a constitutional amendment will do the job. We’ve tried the carrot, and it failed. With the stick of a Balanced Budget Amendment, we can stop government squandering, overtaxing ways, and save our economy.” – Ronald Reagan, April 29, 1982

Charge: “Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get.”

Response: President Obama and congressional Democrats already ended Medicare as we know by cutting $575 billion from the program. Instead of extending the solvency of Medicare, Democrats slashed Medicare spending in order to help pay for Democrats government takeover of healthcare.

Additionally, the president’s calls for job-killing tax hikes will do nothing to solve the problem but everything to ensure job creators sacrifice even more with higher taxes. In total, the tax increases on corporate jet owners, oil producers, and the “millionaires and billionaires” who earn more than $250,000 a couple, would raise revenue by approximately $855 billion—about 6.6 percent of the $12.8 trillion in debt the president will add over the next ten years.

Charge: President Obama now: “Understand – raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up…. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it.”

Response: That’s a sharp contrast from what then-Senator Obama, said in 2006 when he voted against raising the debt ceiling: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies…Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

Now the president has threatened to veto any debt limit increase that doesn’t go through 2013, putting his next election over protecting our next generation. Earlier this year, the Administration demanded a clean debt limit increase with no spending cuts. Now the president is demanding an increase that will last more than seventeen months to get him through the next election. According to economist Keith Hennessy, “Over the last twenty years Congress and the President have acted 44 times to increase the debt limit. Ten of those 44 times lasted more than a year. The other 34 were for less than a year.”

Charge: “Keep in mind that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all… What we’re talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade – millionaires and billionaires – to share in the sacrifice everyone else has to make.”

Response: The president continues to call for huge tax increases on individuals and small business owners earning above $200,000 for an individual or $250,000 for a couple—or as the president calls them, “millionaires and billionaires.” According to the president’s budget estimate, this would increase taxes by $709 billion over ten years. Nearly 75 percent of America’s small businesses file their taxes as individuals. Half of those small businesses would suffer from a higher tax burden under the President’s proposed tax increases, limiting their ability to hire more workers. As the National Federal of Independent Businesses said when the same tax hike was delayed until 2012, “Raising the top marginal tax rate would have hit small businesses the hardest just when the country needs them to invest, expand and hire new workers.”

Charge: “We have tried to live by the words that Jefferson once wrote: “Every man cannot have his way in all things…Without this mutual disposition, we are disjointed individuals, but not a society.”

Response: If we want to quote Jefferson, let’s take a look at all of the other quotes that warn us about public debt and his wish that the constitution included strict debt limitations:

  • “I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing.” – Thomas Jefferson letter to Virginia Senator John Taylor, 1789
  • “But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years.” – Thomas Jefferson, Letter to James Madison, September 6, 1789

Friday, July 15, 2011

Debt Ceiling Increase in Exchange for Budget Cuts?

A bill will be considered on the House Floor next week (final details pending). It will contain spending reforms in exchange for a debt limit increase. An overview of the plan is below.

The Current Plan

The current plan cuts total spending by $111 billion in FY 2012. The savings are divided as follows: reduce non-security discretionary spending below 2008 levels, which saves $76 billion; $35 billion cut to non-veterans, non-Medicare, non-Social Security mandatory spending; defense budget at President’s Budget level.

Total federal spending is scaled back based on the glide path for the fiscal years below:
  • 2012, 22.5% of GDP
  • 2013, 21.7% of GDP
  • 2014, 20.8% of GDP
  • 2015, 20.2% of GDP
  • 2016, 20.2% of GDP
  • 2017, 20.0% of GDP
  • 2018, 19.7% of GDP
  • 2019, 19.9% of GDP
  • 2020, 19.9% of GDP
  • 2021, 19.9% of GDP
A final component of the plan allows an increase in the debt limit but requires the passage of a Balanced Budget Amendment before granting the increase.