Skip to comments.Cut, Cap and Balance: The Only Debt Ceiling Plan That Could Save AAA Bond Rating
Posted on 07/16/2011 8:44:29 AM PDT by Kaslin
The President insists on tax increases, and the Republicans insist on no tax increases.
The House Majority Leader insists on cuts greater than any debt ceiling increase, and the House Minority Leader insists on no entitlement changes.
The Senate Minority Leader proposes ceding Congress authority to the President to determine where the cuts will be, in the hope that he will also own the political fallout.
Its a stalemate, and the world financial markets watch expectantly but nervously for some sign of a responsible solution.
The Wall Street Journal reported that the cost to insure U.S. sovereign debt against default rose nearly 8% Thursday after Moody's Investors Service said it was reviewing the nation's top-notch Aaa credit rating for potential downgrade in after-market hours Wednesday.
Amidst all of this posturing, there is only one real plan: The Cut, Cap and Balance Act, introduced in the Senate last week and likely to be introduced in the House on Friday.
It would cut substantially next years projected deficit, institute statutory spending caps and require Congress pass and send to the states a balanced budget amendment to the U.S. Constitution that has real teeth as the price of debt ceiling increase.
It and it alone offers the prospect of a permanent fix that would satisfy the ratings agencies.
The story of the development of the Cut, Cap and Balance Act is almost as interesting as the Act itself.
Originating as three separate, related policy proposals supported by over 100 Members of Congress, it then grew into a Pledge, in which the three elements were linked as a single set of pre-conditions.
Lawmakers who signed it pledged not to support a debt ceiling increase unless all three pre-conditions were met.
A Cut Cap Balance Pledge Coalition was formed, and it quickly grew to over 200 groups, both Tea Party and non-Tea Party, making it the largest-ever coalition of outside groups focused on a single issue.
All Pledge signers to date have been Republicans, in large part because Democrats traditionally have opposed a Balanced Budget Amendment -- the one element of the plan that requires a two-thirds majority of Congress to pass.
Substantial numbers of Democrats would be required to reach the two-thirds thresholds, and even though the Balanced Budget Amendment is supported by 80 percent of the voting public, many Democrats remain reluctant to support it.
The Cut Cap and Balance Act took the three elements of the original plan and pledge and turned them into a specific piece of legislation, but with a unique twist. Instead of requiring that all three pre-conditions be met before voting on a debt ceiling increase, this new bill actually includes the $2.4 trillion debt ceiling increase that Democrats want, but conditions it on Congressional passage of the Balanced Budget Amendment. The Cut Cap and Balance Act would only require simple majorities to pass, not two-thirds (although it might require 60 votes in the Senate). Once passed, the pre-approved debt ceiling increase would sit there like a ripe plum, [PR1] ready for the plucking but inaccessible, until the Balanced Budget Amendment is passed. This would give Democrats an incentive to support the BBA they now do not have, in spite of overwhelming public support for it. And it would give Republicans the holy grail of fiscal responsibility, a strong Balanced Budget Amendment that cannot be easily watered down by successive Congresses the way that a package of budget and program cuts can be diluted.
Voters, whether Republican, Independent or Democrat, are tired of accounting tricks and typical Washington deals. They understand that the solution, the real solution, is a simple one: to forcibly change the way Congress does its business.
The Cut Cap and Balance Act is such a solution.
It has already garnered more than thirty co-sponsors in the Senate, and is expected to be introduced in the House on Friday.
Its what America wants and, more important, its what America needs, because it is the only plan that puts unsustainable spending and borrowing on a path to sustainability.
That is what the financial markets and the voting public demand, and rightly so.
Colin Hanna Let Freedom Ring Thank YOu!!!!!!!!!!!!
You all note that the SOB Obama is out whinning about this proposal. You see...he has no authority over a constitutional amendment. The president has no say in it at all.
Wanna poke a finger in his eye? Then get this passed and on to the states. Then badger your states to pass it.
I have not seen any specific cut items from the GOP nor the DEMs. Why doesn’t someone on FR start a thread on this. You guys could come up with some great specifics that need the knife.
While I support the concept of a Constitutional requirement for a balanced federal budget, it's an entirely unnecessary distraction at this point.
House Republicans have 100% control over this right now - all they have to do is NOT vote to extend the debt ceiling and, Presto! Instant balanced budget, and there is not a damn thing Obama can do about it.
Do they have the sack for it though? We'll see.
“I have not seen any specific cut items from the GOP”
Nor will you. The facts are stark and unavoidable: Medicare, Medicaid & S.S. need to be put on a diet or taxes will have to skyrocket. Period. End of story. No GOPer is going to touch that with a ten foot poll. Its easier to demagogue. I’ll change my tune when the GOP announces the first item to be put on the chopping block is Medicare Part D.
We already have a statutory spending cap. How is that working? How well has that done over the years? Hold the line. Pay our debts first. Be responsible. We'll keep our AAA rating if we do that. And we don't have to do anything but not take a vote.
Ok, I'll play. Not raising the debt ceiling would mean an instantaneous ~40% cut in Federal spending. So, we start by completely eliminating some entire Federal departments/programs, such as Education, Health & Human Services, Interior, federal unemployment extension, 100% off all foreign aid, contributions to the UN, IMF, etc.
Then, what's left is given an across-the-board 40% haircut. Everything - Social security, medicare, medicaid, the military, all of it - 40% less funding.
Then, we have a national discussion about what we really want to spend our limited Federal revenues on and rebalance as needed, within the constraint of actual revenues.
As if Medicare wasn't already bad enough, Bush really screwed us with Medicare part D.
You guys could come up with some great specifics that need the knife.
100000000000000000000000% correct, boner can win by playing golf, but he’s is too bought off and dumb to play his hand.
Here are my cuts that reduce the deficit by 3/4 the first year:
Education__________________ $129.8 billion
Transportation (I propose
a limit of $10 billion)_________ $84.5 billion
Basic research______________ $18.7 billion
, fishing and hunting _________ $32.8 billion
Fuel and energy_____________ $26.9 billion
Pollution abatement_________ $10.9 billion
Protection of biodiversity
and landscape_______________ $13.9 billion
Housing development_______ $35.5 billion
Community development_____ $25.7 billion
sporting services_____________ $4.1 billion
(I propose cutting the
current amount in half)_______ $16.6 billion
Welfare (eliminate)_________ $495.0 billion
Grants to States
for Medicaid________________ $276.2 billion
R & D Health
(includes NIH)______________ $36.1 billion
Total reduction to annual
spending_________________ $1,206.7 billion
Then here’s my Amendment offering, which could take effect within a couple of years after being ratified by the States. It would constrain the ability to borrow - which would constrain the Federal government spending automatically - it could only spend what it takes in (what a novel idea).
This amendment would limit borrowing term to one year and require that the funds be used to pay for goods, not labor - with the exception of declared wars by Congress, so borrowing can not be used to fund the paychecks of Federal employees OR contractors - voila, control the headcount increases in government to just what government takes in !
Congress shall only have the power to borrow money on the credit of the United States where the term of the debt issued is not more than one year, and those funds must be used to purchase goods; said funds shall not be used to pay employees of the Federal government nor shall they be used to pay labor costs associated with goods or services that the Federal government purchases.
In time of War, where such War is declared by Congress, Congress shall have the power to borrow money where the debt issued is used solely for any military combat purpose specifically related to Wars so declared. Until such War debt is repaid fully, any increase in the total annual expenditure of the Federal government shall be prohibited.
too big to fail strategy has failed in every instance. Let the defaults begin
If you go to my site http://www.freedomradiorocks.com you will see that we great minds think alike!
First lets cut the bullshiite and then we’ll talk about the insurance plans.