BY MALIA ZIMMERMAN – Congresswoman Mazie K. Hirono (D-Hawaii) on July 19 voted against H.R. 2560, the “Cut, Cap, and Balance Act”, which many fiscal conservatives say is necessary to bring the nation’s increasing budget deficit under control. The bill passed the House by a vote of 234 yeas to 190 nays, but is facing tougher challenge in the Senate and does not have the president’s support.
Calling the bill “deceptive,” Hirono, in a written statement said she opposed the Republican-introduced bill that proposes to raise the debt ceiling in exchange for “opening the door to deep cuts to Social Security, Medicare, and Medicaid.” She said the bill also makes cuts to education, transportation and research and development.
“America needs to meet our financial obligations because defaulting on them would likely send us into a deeper recession. This is not a game. People across Hawaii want to see real compromise, not gimmicks like this that threaten Medicare and Social Security,” Hirono said. “We’re facing default in two weeks and these games are burning up the clock. We need Republican leaders to end the antics and start addressing the most pressing problems facing our country: creating jobs and getting our economy moving again.”
Edwin J. Feulner, President of the conservative The Heritage Foundation, takes the opposite view. In a July 21 letter to Heritage members, he writes that the debate over raising the debt limit seems complicated, but it is really very simple.
“Look beyond the myriad details of the awkward compromises, and you see an epic struggle between two opposing camps. On one side are those who have come to realize it would be madness to let the political class borrow more without imposing a serious check on government spending. They have produced budgets and now an actual legislative plan to get things under control. On the other, you find those who consider more spending, taxing, and borrowing a royal prerogative. They have produced nothing but rhetoric and empty promises and have pushed this debate to the brink,” Feulner said.
He said there is one plan in Congress that aims to get spending under control before raising the debt limit and cuts spending immediately but that the Senate, President Obama and media dismissed the idea.
“There is no more time left for political gamesmanship by the tax, spend, and borrow crowd. The Senate has an obligation to debate Cut, Cap and Balance, and the American people need to be given time to consider it.”
Some in the Senate do agree with the House proposal. Senator Ron Johnson (R–WI) told MSNBC this week, “I know Washington is broken. I see business as usual here. But now we’re witnessing business as usual on steroids, and it’s bankrupting this nation.”
But Hawaii’s Senior Senator Daniel Inouye, who is one of six members of Congress on a bi-partisan task force organized by Vice President Joe Biden to negotiate reduce the nation’s deficit, does not agree with Johnson. He has been advocating along with Sens. Max Baucus (D-Mont.), and Sen. Charles Schumer (D-N.Y.) for increased spending and more stimulus funds.
Heritage’s Feulner maintains the nation has to reign in spending because that government spending is currently at 24.3 percent of GDP, and U.S. debt held by the public stands at 69.1 percent of GDP.
At risk is America’s bond ratings, which impact interest the interest on debt and future borrowing.
One of three major bond raters, Moody’s maintains: “If the debt limit is raised again and a default avoided, the Aaa rating would likely be confirmed. However, the outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.”
Standard and Poors said: “We may lower the long-term rating on the U.S. by one or more notches into the ‘AA’ category in the next three months, if we conclude that Congress and the Administration have not achieved a credible solution to the rising U.S. government debt burden and are not likely to achieve one in the foreseeable future.”
Aug. 2 is the deadline for lawmakers to reach an agreement on how to handle the debt ceiling. That is the date that Treasury Secretary Timothy Geithner predicts the U.S. debt ceiling will be reached and the nation will be in jeopardy of defaulting on its payments.