By William Lacy Clay, Member of Congress
As Congress and the nation continue to hurtle toward the critical Aug. 2 deadline for raising the debt limit, I am amazed that while the clock is ticking on America's AAA credit rating and the viability of our entire economy, some of my colleagues continue to cling to an alternative reality that is not burdened by mathematics or other inescapable facts.
As the ranking member on the House Financial Services Subcommittee on Domestic Monetary Policy, let me simply state the hard truth: To get deficit spending and our national debt under control, we need to do three things simultaneously: cut spending, increase revenue and have the courage to put everything on the table as we accomplish these tasks in a balanced and responsible way.
If we fail to act, the damage to our still-recovering economy and world financial markets would be massive, and the unintended negative consequences could be catastrophic.
Consumers and businesses would face soaring interest rates when they least can afford them. U.S. Treasury notes, the gold standard of guaranteed investments, would lose their credibility. And with that default, the U.S. dollar, which is the world's reserve currency, would be damaged beyond calculation. All of the progress we have made economically over the last 15 months could be lost in a matter of days. And the United States would enter uncharted financial waters with many unforeseen dangers.
As a bipartisan fiscal commission recommended, the United States needs to adopt a $4 trillion fiscal stabilization package over the next 10 to 12 years. That plan would cut domestic spending, trim military expenditures, close tax loopholes that give away billions to big oil and the wealthiest few, and find real savings in Medicare and Medicaid.
Democrats have proposed a 3-1 formula that would allow for $3 in spending cuts for every $1 in new revenue. So we have met our Republican colleagues more than half way in this painful process. We even are willing to discuss significant savings in Medicare and Medicaid as long as essential benefits for seniors and the most vulnerable are preserved.
Some spending cuts should be easy to agree on.
* Ending subsidies for big oil companies who are reaping enormous profits from American consumers would raise $40 billion over the next decade.
* Changing an IRS tax rule that applies mostly to oil companies would generate $72 billion.
* Ending corporate tax breaks for private jets would raise $3 billion.
* Forcing hedge fund managers to pay their fair share of income taxes would raise $20 billion.
* Eliminating tax credits for ethanol and ending unnecessary agricultural subsidies would save $116 billion in 10 years.
* Selling off unused or underused federal buildings would save $24 billion.
We can accomplish these and many more domestic spending cuts without the misguided Republican cuts to food safety inspections and nutritional support for women and at-risk children.
Democrats also are committed to restoring tax fairness.
We have proposed limiting the total value of deductions for wealthy taxpayers who earn more than $500,000 per year. That change alone would bring in an extra $100 billion over the next decade.
But changes to the tax code and trimming domestic spending will not be enough. If we're serious about this mission, then the Defense Department needs to put its cards on the table, too.
The United States has spent $1.2 trillion in Iraq and Afghanistan over the last 10 years on two wars that were charged on the national credit card with no provision to pay for them.
Thankfully, our combat role has ended in Iraq and the draw-down from Afghanistan will begin this month. The peace dividend from ending those conflicts can have a major impact on closing the deficit without endangering national security. But these savings are just the beginning of cutting the fat at the Pentagon.
Eliminating the purchase of obsolete spare parts for all branches of the armed services would save $369 billion in the next decade.
Fully implementing the reforms recommended by the bipartisan Defense Acquisition Panel would save taxpayers $270 billion in 10 years.
Realigning our nuclear arsenal to meet 21st-century threats, instead of preparing to refight the Cold War would save $113 billion.
And history shows that reducing wasteful defense spending while maintaining the strongest military in the world can stimulate the economy in a powerful way.
Finally, a substantial bipartisan compromise on deficit reduction and raising the debt limit would generate a confidence dividend that is sorely needed across the country.
We need to prove to the American people that when their families, their jobs and their children's future are at stake, Congress has the courage to put politics aside and just get this done. The time for excuses is over. The time for acting like adults is now.
U.S. Rep. William Lacy Clay is a Democrat from St. Louis.