Friday, November 11, 2011

Grassley Q&A on deficit reduction


Q&A on the Deficit Reduction Committee
with U.S. Senator Chuck Grassley

Q: What exactly is the deficit reduction committee in Congress, and under what authority was it created?
A: Last summer, Congress passed the Budget Control Act of 2011. The law made it possible for the federal government to borrow more money, avoiding possible default on debt, and authorized the formation of a Joint Select Committee on Deficit Reduction. Twelve members of Congress – six Democrats and six Republicans – were named by party leaders to the Joint Committee, and two of them are designated as co-chairs. Committee members are charged with presenting a ten-year proposal for at least $1.2 trillion in deficit reduction by November 23. Both the Senate and the House are supposed to vote on the Joint Committee’s legislative package by December 23. If the Joint Committee doesn’t agree on deficit reduction legislation or it is not enacted, then an automatic spending reduction process would be triggered beginning in January 2013. These automatic reductions would be divided evenly between defense and non-defense spending. The way that the Budget Control Act restricts amendments and limits time for debate is unusual. I’m an advocate for regular order where standing committees develop responsible policy and legislative proposals in their areas of jurisdiction. And, I voted against the Budget Control Act because the spending reductions weren’t proportional to the massive fiscal challenges we face. But, Article I, Section 5 of the Constitution gives to both the Senate and House the power to “determine the Rules of its proceedings,” and the Budget Control Act was adopted by Congress and signed into law by the President on August 2, 2011.

Q: Can Congress unravel the law if the Joint Committee isn’t successful, preventing the automatic deficit reduction from taking effect?
A: As the director of the Congressional Budget Office recently said, “Any Congress can reverse the actions of a previous Congress.” At the same time, there is tremendous pressure to begin reversing unsustainable growth in the federal debt and deficits. In 2009, for the first time ever, the deficit was more than $1 trillion. From 1946 to 2008, budget deficits averaged 1.7 percent of the gross domestic product and exceeded five percent only three times. From 2009 to 2011, budget deficits will average 9.4 percent of the gross domestic product. The federal debt held by the public has grown from 40 percent of the gross domestic product in 2008 to an estimated 69 percent of the gross domestic product in 2011. The fact that Congress can vote to abandon plans put in place for spending restraint – and, too often, either has unraveled budget controls or never adopted them in the first place – makes the case for a constitutional requirement for a balanced budget. I’m a co-sponsor of legislation that would establish a balanced budget amendment to the Constitution. The last time the Senate voted on a balanced budget amendment was in March 1997, when the nation’s debt was less than half of what it is today. The resolution failed by one vote. A balanced budget amendment passed the House of Representatives in 1995. Both the Senate and the House of Representatives must vote on a balanced budget amendment this year, sometime before December 31, thanks to a requirement in the Budget Control Act.

Q: Don’t tax increases need to be part of the solution for reducing deficits and debt?
A: Fiscal discipline and economic growth need to be the top priorities for deficit and debt reduction. Unchecked government spending will further threaten economic opportunity with higher debt and higher taxes. It might be one thing if tax increases actually were used to reduce the deficit, but that’s not what happens. Since World War II, every new dollar in tax increases has resulted in Congress’ spending $1.17. Raising taxes has been a license for Congress to spend even more. And, every dollar spent by Congress is a dollar taken out of the economy, and higher taxes leave fewer resources for the private sector to make investments, expand production, and create sustainable jobs. The work of the Joint Select Committee on Deficit Reduction should stay focused on reducing spending, not on finding ways to increase revenue to fuel excessive government spending. In addition to supporting reforms to entitlement spending to make sure valued programs are available to future generations of Americans and sustainable for taxpayers, I’ve submitted specific recommendations to the Joint Committee for spending reductions totaling hundreds of millions to even billions of dollars from administrative restructuring, reduction of duplicative and overlapping programs, and unnecessary and wasteful programs under the authority and jurisdiction of the Senate Committee on the Judiciary, where I serve as Ranking Member. I also made recommendations to the Joint Committee for my bipartisan legislation that would save $4.8 billion in federal government spending on prescription drugs, including through Medicare and Medicaid, by stopping deals between name-brand and generic drug makers that keep less expensive drugs off the market. I’ve urged the Joint Committee to adopt caps on farm payments, for a savings of $1.5 billion, and backed a goal of saving $23 billion in spending from programs that fall under the jurisdiction of the Senate Committee on Agriculture. The bottom line is that Washington doesn’t have a revenue problem, it has a spending problem.

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