A radical play from House conservatives to trade an agreement to raise the debt ceiling in return for a spending cap, massive spending cuts and a Balanced Budget Amendment is catching fire as Tea Party members continue their push for bold action even if it costs them their job.
"In the Old World, this thing wouldn't stand a chance. But it's a whole different time," says Rep. Jim Jordan, head of the conservative House Republican Study Committee. "The situation could not be more serious and it's time for bold action."
Jordan has worked fast to collect 80 signatures on a draft letter to House leaders that lays out a plan to balance the budget in return for GOP support to raise the $14 trillion debt ceiling. [See a slide show of 6 consequences if the debt ceiling isn't raised.]
Dubbed "Cut, Cap and Balance," the Jordan plan would cut some $300 billion now in order to halve the deficit next year; impose a spending cap of 18 percent of the gross domestic product, far less than the current 24 percent, and OK a Balanced Budget Amendment for the states to ratify.
"If you've got big financial problems," Jordan tells Whispers, "you've got to change your behavior, and you've got to do some things in the short-term, some things in the mid-term and some things in the long-term."
Key to that is the long-term proposal to press for a Balanced Budget Amendment which Jordan says already has the backing of 47 GOP senators. If that would pass, he promised to put pressure on state legislatures to act. "If we actually get it through," he says, "Oh my goodness." [See a slide show of 6 ways to raise the debt ceiling.]
Some Tea Party Republicans who have staked their job on cutting the deficit are worried that the House leadership isn't going to press President Obama and Treasury Secretary Tim Geithner hard enough to make cuts in the debt ceiling talks. In his letter still being circulated for more signatures, Jordan writes: "We must state unequivocally that we will not vote for a 'clean' debt ceiling increase."
House Speaker John Boehner has said the same thing but the Jordan letter provides either pressure or the help Boehner needs to negotiate with Obama's team.
And Jordan says that he's been "encouraged" during his talks with Boehner's team and Senate GOP conservatives that the Republican Study Committee's approach has a chance of being used in the negotiations.
What's more, he doesn't buy the concerns raised by the administration that the nation's financial health would take a hit if the debt ceiling isn't increased fast. "The sky is going to fall belief, well, that's going to happen in two or three years if we don't do something bold and drastic. If we're just going to tinker, if the president is going to just propose a couple wimpy things and say now let's do this small thing and raise the deficit, I would much rather have the problem now," adds Jordan.
In fact, he warns, a U.S. debt crisis is just around the corner. "But for the fact that we're the United States of America, we should have already had a crisis, because our debt to GDP ratio, deficit to GDP radio, is very comparable to the countries who had the crisis in the last few years, Greece, Portugal, Spain, Ireland."
Jordan adds: "It's going to happen, the greatest country in the world is going to have a debt crisis if we don't do something bold and dramatic that actually begins to fix the problem. This is the opportunity and members see that."
Below is the text of the letter he is circulating for more signatures:
The Honorable John Boehner
Speaker, U.S. House of Representatives
Washington, DC 20515
The Honorable Eric Cantor
Majority Leader, U.S. House of Representatives
Washington, DC 20515
Dear Mr. Speaker and Mr. Leader,
The fast-approaching debt ceiling vote gives us an opportunity to make a bold statement to the American people about what direction we want our country to go. Further, given the condition of the country's finances, it is imperative to the future of the country that we fight for an immediate shift toward fiscal responsibility. Consider these staggering facts:
The debt held by the public has more than doubled in the past 5 years. The interest paid on the debt is currently projected to more than triple over the next 10 years and may alone consume all of our tax revenues by the middle of this century. Several weeks ago, PIMCO, a management company handling $1.2 trillion in assets, dumped all of its U.S. government debt holdings; its cofounder William Gross saying that regardless of borrowing authority, unless spending is curtailed, the government will in essence default on its debt by "picking the pocket of savers." In April, for the first time since 1941, Standard & Poor's (S&P) revised its outlook on the United States credit rating from stable to negative, citing the fear that Congress will fail to address the nation's medium- and long-term budgetary challenges. As China considers ceasing its purchase of U.S. debt securities, the International Monetary Fund has forecasted that the size of China's economy will surpass that of the United States in 2016, effectively ending the "Age of America."
Put in the context of the above facts, we believe the willingness of our conference to pursue bold solutions to Washington's spending problems can breathe new life into the "Age of America".
We must state unequivocally that we will not vote for a "clean" debt ceiling increase. We share your belief, as articulated in your speech in New York on May 9th, Mr. Speaker, that if we do not reverse the out-of-control spending that has led us here, it would be grossly irresponsible for us to extend the limit on the national credit card.
We look forward to working together with you and our entire Republican team on developing bold solutions for reducing spending and reforming the way Washington budgets and spends taxpayer dollars. Following are some solutions that we know will achieve this goal.
1. Americans deserve immediate spending cuts that demonstrate that we are charting a swift path toward a balanced budget. We must implement discretionary and mandatory spending reductions that would cut the deficit in half next year.
2. To ensure that spending cuts continue, we need statutory, enforceable total-spending caps to reduce federal spending to 18% of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached--an approach taken in a bill by Rep. Mack and in another bill by Reps. Kingston, Flake, and Graves.
3. To fundamentally and permanently reform the way that Washington budgets and spends, we must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and including a Spending Limitation Amendment (SLA) like the statutory spending caps described above. Rep. Joe Walsh has introduced a BBA with a spending limit provision (H.J.Res. 56) that has already earned the support of 47 Republican senators.
We believe it is prudent to limit the extension of borrowing authority as much as possible, in order to demand accountability from Senate Democrats and the Obama Administration.
With each passing day our nation's fiscal health gets worse, leaving our children and grandchildren falling farther into debt. The Democrats have given up, saying that the only answer to excessive borrowing is more borrowing. Therefore, it is imperative that we move quickly and unite behind a plan to restore fiscal responsibility to Washington and renew the Age of America.
We look forward to working closely with you.