By Robert J. Dold and Daniel Lipinski
Americans are rightfully concerned by the specter of the "fiscal cliff" -- the large tax increases and spending cuts scheduled to kick in Jan. 1.
According to the Congressional Budget Office, going over the cliff would be a blow to our ailing economy, sending the nation's unemployment rate back to above 9 percent.
Simply canceling all the tax increases and spending cuts would not be good for the economy in the long run. It would not only add even more to our $16 trillion debt, it would also renege on a commitment to spending cuts and debt reduction made in last year's Budget Control Act. This would send a bad signal to credit ratings agencies and our creditors, potentially causing interest rates to spike and sending the nation into another recession.
Neither of these options are acceptable. The reality is that if the two political parties are unwilling to work together on a better solution, we are likely headed to one of these undesired outcomes.
But if the parties are willing to compromise, there is a much better solution. A solution that not only avoids the cliff, but sparks economic growth and job creation by putting our nation on a path to fiscal sustainability.
A Bipartisan Policy Center task force headed by former Sen. Pete Domenici, a Republican, and Alice Rivlin, former White House budget director, a Democrat, estimates it would take $2.8 trillion in debt reduction over the next 10 years to stabilize the debt at 69 percent of gross domestic product.
To get this done is through a balanced approach of spending curbs, new revenue and economic growth. This approach was laid out by the bipartisan Simpson-Bowles deficit panel of the National Commission on Fiscal Responsibility and Reform and has often been recommended in Washington, but not followed.
We believe this should be the way that Washington avoids the fiscal cliff. Legislatively, a grand bargain could be put together before the end of the year in a bill that includes two parts.
The first part would be an elimination of at least part of the "cliff" taxes and cuts, facilitated by making a significant down payment on deficit reduction that includes immediate spending cuts and new revenue. There are a number of options on the table that have already been spelled out in various debt-reduction commission reports, the discussions that took place last summer between the Obama administration and House Republicans, and in bipartisan legislation.
The second part would be to set up a process for early 2013 that will mandate broader changes to the tax code and entitlement programs. Congress can do this by requiring its committees to produce by a certain date legislation that lengthens the life and sustainability of entitlement programs and reforms the tax code to boost economic growth and bring in new revenue. Rather than rush these changes into fruition before the end of the year, it would be best to achieve these results by going through the legislative process and the appropriate congressional committees.
To encourage Congress to complete this second part, there would have to be a trigger in place to assure that specific debt cuts would be made if Congress failed to produce the debt-reduction legislation. Last summer we put in place the sequestration process -- the across-the-board cuts -- to encourage the supercommittee to succeed. Unfortunately, the committee did fail. But today the sequestration trigger is having the desired effect of forcing leaders back to the bargaining table.
Last March, the two of us cooperated in helping to bring to the House floor a budget resolution based on the Simpson-Bowles recommendations. This bipartisan budget only received 38 votes at the time. But with the election over and the fiscal cliff looming, we are confident there is a greater desire among rank-and-file representatives for cooperation.
A solution before we go over the cliff is not going to be easy; but it will only get harder the longer we wait. We believe all the pieces are in place for an agreement that not only avoids the fiscal cliff, but fixes our budget, protects taxpayers from even more economic harm and sparks job creation.
All that's missing is the leadership and resolve to work together and compromise.
Illinois Reps. Bob Dold, a Republican, and Democrat Dan Lipinski helped introduce in March a budget modeled after the Simpson-Bowles deficit reduction recommendations.