Americans tuning in last night to watch President Barack Obama’s primetime address from the East Room of the White House might have thought they stumbled upon yet another re-run from the networks. Instead of hearing news that Washington finally broke the debt ceiling stalemate, viewers were treated to more of the same from their President. He still had no plan for dealing with government overspending and overborrowing, and he repeated his never-ending call for tax hikes. Unfortunately, the plans proposed by House Speaker John Boehner (R–OH) and Senate Majority Leader Harry Reid (D–NV) don’t get the job done, either.
The President’s speech came as America stands at a fiscal precipice, with just a week to go before the August 2 deadline to raise the debt ceiling. Though the credit rating agencies see America’s risk of default as small (though increasing), there remains the other, more serious risk–the failure to do enough to bring down debt in order to avoid a downgraded credit rating. Standard and Poor’s warns that Congress and the Administration:
[Might] agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”
Boehner and Reid have both offered proposals to raise the debt limit in order to avoid default, but their plans leave too much undone. Of the Boehner plan, Heritage’s Alison Fraser writes that though the proposal would cut $1.2 trillion in discretionary spending, there’s no guarantee that those cuts will occur, its results would offer only modest reductions in publicly held debt under the best scenarios, and the plan would do nothing to reform entitlements—the real driver of our deficits in the future. Meanwhile, the Reid plan falls short of Boehner’s by $800 billion. In short, neither plan does enough to reduce America’s debt, and neither would address the concerns raised by the credit rating agencies. Fraser explains:
Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.
Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate. Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs. And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.
Last night, when President Obama attempted to explain the nation’s debt problems, he said that every family knows that “a little credit card debt is manageable.” With $14.294 trillion in debt, the President grossly understates the problem—and he forgets that Americans are well aware of Washington’s spending addiction.
Half measures, though, won’t solve America’s debt crisis. They won’t fool the credit ratings agencies, and they won’t satisfy the American people. Heritage’s David Addington writes, “Forget the McConnell, McConnell–Reid, Coburn, Gang-of-Six, Boehner, and Reid plans. Go with the American plan — cut government spending, deeply and right now, for the good of the country.” That’s good advice for our leaders in Washington, no matter which side of the aisle they fall on.
- President Obama is losing support among his base. A new Washington Post/ABC News poll shows his support among liberals and African Americans has dropped significantly.
- The recession has taken a sharp toll on Hispanic families. They account for the largest single decline in wealth of any ethnic or racial group, losing 66 percent from 2005 to 2009.
- Illegal immigrant college students in California will now have access to privately funded financial aid under a new measure signed into law by Gov. Jerry Brown (D). Brown says he is inclined to support a measure granting those students access to state-funded tuition assistance, as well.
- A new poll shows that 57 percent of Americans favor the repeal of Obamacare. And it’s no surprise. A Heritage report shows that job growth stalled after the law was enacted.
- America is increasingly overcriminalized with the federal government’s proliferation of poorly written criminal laws. Yet some in Congress are working to overturn unanimous Supreme Court decisions that put sane limits on those laws. Read more at Foundry.org.