My Senate Agenda #6: Balancing Our Budget

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BY CONGRESSMAN ED CASE (2002-2007) – Our national priorities must be to fix Washington, grow our economy and balance our federal budget.

That is because everything else – from good jobs to assuring our energy needs to strengthening education, preserving Social Security and Medicare, protecting our environment, providing for our common defense and more – depends sooner or later on achieving those three goals. And it must be all three, because they’re all connected and any one unachieved will drag down the others.


I earlier laid out my agenda for fixing DC and growing our economy (as well as strengthening tourism and our defense community, together almost half of Hawaii’s total economy). Our federal budget crisis – and it’s exactly that – is in many ways the toughest to solve (as we saw last week when Congress failed for the third straight year to pass an annual budget bill and last year when the Supercommittee punted).

Here’s the big picture of where we are, how we got here, and where the status quo is taking us. In 2000 our annual budget was balanced (after a decade of hard work) and our total national debt (what we all owe through our government to our lenders) was $5.6 trillion, or 58% of our gross domestic product. This year we’re running a deficit of $1.3 trillion and our total national debt is now $15.6 trillion, over 100% now of GDP. Left unresolved, total national debt will soar well over $20 trillion by 2020.

That status quo and future are not options. We can and must do better.

Ten Principles. In rebalancing our federal books, I will be guided by these ten principles:

(1) Rebalancing our books is essential to longterm economic growth. Uncontrolled deficits and debt catch up with economies. Example: Greece.

(2) Rebalancing our books is essential to national security. The money we’re borrowing to pay for our huge deficits is coming increasingly from foreign countries like China. We do not want to be China’s debtor over the next generation.

(3) All or nothing approaches won’t fix the budget. Balancing our budget solely by slashing spending would mean cutting all services except for Social Security in half, while balancing it solely by raising taxes would require increases that would cripple our economy.

(4) Growing our economy comes first but won’t alone balance our budget. Even an economic growth rate above any reasonable projections will not itself stabilize the defiicit, much less reduce it.

(5) Ending the Iraq and Afghanistan wars won’t itself balance our budget. As tragic and expensive as they have been, they were not the principal cause of our budget crisis and their end won’t solve it.

(6) “Waste, fraud and abuse” must be addressed but are not themselves the cause. Even the most efficient government, operating at the same size and rate of growth and fueled by the same revenues as currently, would run at an unacceptable deficit.

(7) Entitlement and discretionary spending are overwhelming our budget. These are growing faster than current revenues or the ability of our economy to sustain them over the next decades, and must be set on sustainable paths without gutting their purposes or welching on their promises.

(8) When in a hole, first stop digging. We cannot stabilize total debt without stabilizing and then reducing annual deficits, and we cannot stabilize and then reduce annual deficits without first balancing income and expenses month-to-month, year-to-year.

(9) There’s good news and bad news. The bad news is that there’s no silver bullet, no place to run and hide; we’re just plain spending far more than we’re making and it’s caught up to us. The good news is that the sooner we face that music, the faster and better we’ll be able to forge inclusive solutions, just as we did in the ’90s.

(10) A Senator matters, in being honest with fellow citizens, identifying and debating all options, fashioning fair solutions and making the necessary decisions.

Ten Specifics. As examples, my agenda on rebalancing our federal budget will include these ten specifics:

Grow our economy. I said it before and say it again: a strong economic agenda, focused on the four Ts (tax reform, trade, technology and training), will help greatly in restoring a sustainable revenue flow.

Fully implement PAYGO (pay-as-you-go). To stop the bleeding and move to reduced deficits and then balanced budgets, all federal actions must be fully “paid for”, meaning that, except in compelling situations like wars or recessions, deficit spending must cease as the norm.

Expire the Bush upper income tax cuts. These were unsustainable, unnecessary and unfair when enacted, are not key to economic growth, and cannot be justified in this budgetary climate.

Reform the federal tax code. This is not just updating a 20th Century code to drive a 21st Century economy, but about removing a plethora of unjustifiable special interest tax breaks that deny revenue and increase the tax burden on the rest of us.

Cap discretionary spending cost escalation. The bottom line is that discretionary spending growth must be suspended wherever possible while our economy and revenues catch up. This must include defense programs not key to our national security, such as expensive and unproven new weapons systems, since the defense budget represents 19% of all federal spending and 59% of all discretionary spending.

Strengthen Social Security and Medicare. Much as our federal budget overall, current and projected expenses of these core programs are far outpacing revenues and must be rebalanced if they are to continue to deliver for future generations.

Rein in health care costs. Cost escalation in Medicare and other federal health care entitlement programs in particular is one of the biggest contributors toward fiscal unsustainability and must be controlled.

Target waste, fraud and abuse through increased independent oversight and audit capabilities. This is especially required in larger programs such as defense and Medicare.

Pass timely annual federal budgets before any spending approvals. Federal spending outside of the framework of a yearly, integrated, balanced and enforceable federal budget makes budget reform virtually impossible and must stop.

Require balanced budgets except in true emergencies. Whether by proposed constitutional amendment or act of law or enforceable rule of Congress, deficit spending as the rule rather than the exception must stop.
With strong, effective and sustained leadership in Washington, especially over the next decade, we can confront and overcome this central challenge to our economy and country.

With aloha,

Ed Case

U. S. Congressman (2002-2007)
Member, Committee on the Budget