As of this writing, the debt ceiling fight between House Republicans and the White House remains unresolved.
House Republicans have, in my view, made some rather tepid proposals to cut spending: raising the existing age for work requirements for food stamps to 55; expanding the work requirement to Medicaid and “cash welfare” eligibility; “clawing back” unused federal Covid funds from the states; spending caps that would save $4.8 trillion over the next decade.
The first two proposals, in particular, are popular with Republican voters but anathema to Democrats. The third, as drafted, is largely symbolic. None will result in a balanced budget, much less contribute to paying down our $31.46 trillion national debt.
Under the GOP plan, the debt growth will slow, but it will still grow. And it all hinges on Congress committing to adhering to the spending caps year after year. Ha!
The White House budget predictably includes tax increases: $4.8 trillion worth. However, this is not enough to balance the budget or pay down the debt either, as this budget also calls for spending increases.
Washington – Congress, the White House, Republicans, Democrats – is unwilling to take on our exploding national debt in any sort of serious or permanent way.
Addressing our national debt, by far the largest on the planet, will take adjustments to both revenue (taxes) and spending. It’s that simple. Neither party is willing to balance the two factors to a degree that will balance the budget and stop the debt from growing, much less reduce it.
In the President’s talking points on the budget, he says the proposed tax increases are for billionaires and corporations. There’s more to it than that. There’s also a proposed 1.2% increase on the Medicare tax applied to all paychecks. Capital gains tax would be doubled. Here’s a kicker – unrealized capital gains would be taxed at a minimum rate of 25%
That last one is infuriating. If you place your savings in an investment account – and in this century nearly everyone does because there has been no such thing as an interest-bearing savings account for 20 years, thanks to the Federal Reserve’s ridiculous and overlong suppression of the Fed Rate – if it does well, you will be taxed whether you cash out or not. No. Just no.
We need to simplify and reform our tax code. That is not what the White House budget does. It raises some revenue, but not enough to offset significant debt growth over the next decade.
This year I learned about an initiative that takes some of this budget foolishness out of Washington and empowers the states. The Compact for a Balanced Budget is a sensible alternative to the endless Congressional do-loop that results in nothing but more debt year after year.
Five states have joined the Compact, passing legislation to join a binding interstate contract: Georgia, Mississippi, Alaska, Arizona, and North Dakota. The Compact is a cooperative approach among the states to ratify an amendment that would only allow the federal government to raise the debt ceiling with the approval of a majority of states.
The states have a lot at stake here, especially New Mexico, which leads the nation for reliance on federal funding. From school meal funding to Medicaid, states rely on federal dollars. In a budget crisis, this discretionary funding would be the first to be cut, much as we are seeing unused Covid funds on the chopping block now.
Stabilizing federal subsidy funds year-to-year is important. And by holding an important check on federal spending, the states could do that by joining the Compact and passing the debt ceiling amendment.
If that sounds extreme to you, scan the news and consider what a debt default would look like. Or consider that the national debt now totals $94,000 per person – nearly $400,000 for a family of four – and neither caucus in Congress has a real plan to pay it off. In fact, both parties in Congress are okay with letting it continue to increase indefinitely.
Take a look at balancedbudgetcompact.org to see how the states can help check Washington’s runaway spending. Or, if you want to be depressed, bookmark the national debt default clock: debtdefaultclock.us. It’s two minutes to midnight.
Merritt Hamilton Allen is a PR executive and former Navy officer. She appears regularly as a panelist on NM PBS and is a frequent guest on News Radio KKOB. A Republican, she lives amicably with her Democratic husband north of I-40 where they run two head of dog, and two of cat. She can be reached at news.ind.merritt@gmail.com.