Crushing Debt Requires Substantive Solutions

Statement

Even before the latest debate on the government shutdown and the debt ceiling, we have been hearingsome politicians claim our fiscal crisis is over and the government should raise more in taxes to pay for more government spending, which they believe has been cut by too much in recent years. Modeststeps have been taken to reduce discretionary spending and hundreds of billions of dollars in new taxes have been piled on middle and upper income families. These efforts have caused slight improvements in the short-term annual deficit. However, the clear message from the nonpartisan Congressional Budget Office (CBO) is that our debt outlook, particularly over the medium- and long-term, is getting dangerously worse. While we have been dealing with discretionary spending and revenue policy, Congress and the President have failed to address the root cause of our debt problems, the impending insolvency of entitlement programs. We must enact structural entitlement reform, along with comprehensive pro-growth tax reform, to address our debt crisis and boost the economy.

The U.S. Treasury Department reported in its monthly Treasury statementthat the federal government has taken in approximately $2.473 trillion in tax revenue so far this year. A nearly $285 billion increase over last year, reflecting a record level of taxation. Even with this increased tax revenue, our federal government still has a $755 billion deficit this year due to its $3.228 trillion in spending. The fact is the federal government is still spending much more than it takes in, which cannot be sustained.

CBO projected, that despite slight short-term decreases in the federal debt held by the public, we are on a path to a crushing level of debt. The report numbers show that if Congress waits until 2015 to address this debt, then it would need to enact more than $141 billion in new tax hikes and spending cuts each year for the next 25 years simply to maintain our current unsustainable debt level. Each year of delayed action after that would result in a need for greater annual tax increases and spending cuts.

Combining thoughtful tax reform with fundamental reforms to mandatory programs is necessary to improve our economy, and get out of this severe debt. CBO predicted that budget deficits would rise "mainly because of increasing interest costs and growing spending for Social Security and the government's major health care programs." Failure to enact structural reforms to these programs will, sooner rather than later, cause devastating consequences for our economy. We must address it, and we must do so in a manner that is fair to current beneficiaries.

Additionally, ourtax code is far too big, complex and anti-competitive to serve as the foundation for the economic growth our country needs. The more than $1.5 trillion in tax increases that have been enacted in recent years have made the complexity and burden of our current tax code worse and have hindered, rather than fueled, economic growth. Congress has not taken the steps needed to energize our economy. We need comprehensive tax reform that would eliminate the complexity in the current tax code and lower tax rates for all individuals, families and businesses. This can help generate additional revenue and economic growth and make America's tax code more competitive.

Modest steps are not good enough. We must take substantive action to invigorate our economy. Our nation is still in overwhelming debt. The federal government still spends more than we have. We are still in a big hole. The only way to get out of it is to actually address the problem, not claim that small progress is the solution.

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