By Chairman Jason Smith
With the way cable news talking heads describe debt ceiling negotiations, one might think America is headed for an extinction-level event.
Left-wing pundits argue that anything but a “clean raise” in the debt ceiling – extending America’s credit card limit with no conditions – will bring about an economic apocalypse. Even more misleading, Democrats in Congress are trying to scuttle the very notion of bipartisan negotiations by drumming up fake threats to Medicare and Social Security.
As the chairman of the House Ways and Means Committee with jurisdiction over the debt ceiling, Social Security, and Medicare, no debt ceiling legislation that passes through my committee will include cuts to these vital programs. Period.
Meanwhile, it is President Joe Biden and congressional Democrats whose ongoing inflation crisis, fueled by reckless spending, has already pushed Social Security further towards insolvency and is threatening more than $500 billion in potential cuts to Medicare over the next decade under existing law. If they were serious about protecting these programs, they would take a long look in the mirror first.
Debt ceiling negotiations are something Democrats – and even then-Senator Biden – have agreed to multiple times in our nation’s history. Deficit reduction policies have often been tied to debt limit negotiations. In fact, the last 11 spending reduction reforms enacted by Congress were bipartisan and attached to legislation that raised the debt ceiling. As a senator, Biden voted for such reforms in 1985, 1987, 1993, and 1997, and helped negotiate spending constraints in 2009 and 2011, when he was vice president.
Opponents of such negotiations like to point to the 2011 U.S. credit downgrade by rating agency Standard & Poor (S&P) as the reason negotiations are dangerous. Yet, that rating downgrade occurred because, according to S&P, “political brinksmanship” prevented Congress and the White House from providing a credible plan to solve the nation’s long-term debt problem. In other words, it was not a discussion of fiscal responsibility, but a lack of fiscal responsibility that led to a credit downgrade.
Congress has another opportunity to protect taxpayers – but lifting the debt ceiling to avoid default must be paired with cuts to Washington spending to help tame today’s inflation crisis and strengthen America’s long-term economic and fiscal health. Simply raising our credit limit without examining ways to reduce inflationary deficit spending means we are just scheduling America’s next debt crisis.
Americans are effectively paying twice for Washington’s spending addiction. Not only are they paying higher prices, but the Federal Reserve is likely to continue to raise interest rates at the fastest pace in 40 years to combat the rise in consumer prices. That means interest payments on the debt have increased 29% this year. America is spending more on our debt than we spend on housing and veterans’ benefits.
By 2033, the annual interest payments alone will cost $1.4 trillion – more than we spend on our entire national defense or Medicaid benefits. If we continue on our current trajectory, interest payments on the debt will crowd out critical national security and public health priorities. That moment is coming sooner rather than later precisely because since taking office, President Biden has embarked on a $10 trillion spending spree. He has increased spending more than any other president by this point in their administration.
Democrats deflect from their wasteful spending by pointing to the 2017 Tax Cuts and Jobs Act – which led to the lowest unemployment in 50 years and higher pay for the lowest earners – as a strawman for the nation’s ballooning debt. The facts point in the exact opposite direction. Under the legislation, federal revenues reached the highest level in American history last year: $4.9 trillion. That was $1 trillion more than the Congressional Budget Office (CBO) projected for 2022 when the bill passed, and $1.6 trillion higher than revenues were when the Republican tax cuts became law.
Tax revenues today are the highest share of the economy since 1945, the last time America was fighting a world war. Even with more money flowing to Washington than any time in history, the government is projected to run trillion-dollar deficits as far as the eye can see. Washington has a spending problem, not a revenue problem.
There is only one viable solution: reform spending in Washington and protect the promise we’ve made to current and future retirees.
The moment to act is now, and Democrats’ failure to engage in meaningful dialogue about our unsustainable spending endangers the federal programs millions of America’s seniors rely on now and benefits they expect in the future. For Washington Democrats to engage in politics as usual is manifesting the very crisis they claim they want to avoid. House Republicans are ready to negotiate in good faith. President Biden would do well to remember his past and do as he has done before: find a bipartisan, common-sense way to raise the debt ceiling and address Washington’s spending habit.