Tue Feb 15, 2011 1:12pm EST
If the debt were to continue to grow as a share of the economy, an
ever-increasing share of revenues would have to be devoted just to paying the
interest on the national debt, so that in 2020 interest payments would be
nearly as large as all defense spending. Such escalating interest payments
would create an unsustainable cycle that would eventually force dramatic
adjustments. Without appropriate reforms, this path would have consequential
effects on the U.S. economy.
While it is apparent that adjustments are necessary, we need to choose our path
wisely. Cutting services and programs too much, too soon would jeopardize the
recovery and destroy tens of thousands of jobs. Cutting the deficit today
without making a long-term commitment to fiscal responsibility could enable a
return to profligacy in the future. Cutting spending indiscriminately would
force us to cut investments in vital public goods, and focusing reform solely
on spending would impose an undue burden on those most in need while ignoring
the opportunity to make our tax system more simple, fair, and efficient.
The President's plan navigates these challenges. The Budget lays the foundation
for long-term growth while cutting spending in order to reduce the deficit.
Making a multi-year commitment to the principles embodied in the President's
Budget will reduce the risk of future crises, reassure investors and provide
certainty about the future path of spending and taxes. In addition, a
multi-year commitment will help ensure that borrowing costs remain low, making
home ownership and higher education more accessible for Americans and making
long-term investments more attractive for American businesses. Together the
increased certainty and improved confidence will contribute immediately to
economic growth and job creation.
History provides many examples of how past Congresses have made similar
multi-year commitments. In some cases, Congress made permanent changes to
policy that lowered the deficit over many years. For example, the 1983
amendments to Social Security extended the solvency of the Social Security
Trust Fund for several generations. In other cases, Congress adopted budget
rules that locked in a path of deficit reduction, limiting future deficit
spending. For example, discretionary spending caps and PAYGO rules for
mandatory spending and revenue legislation adopted in 1990 and 1993 contributed
to reductions in the budget deficit, and eventually to budget surpluses.
Restoring fiscal sustainability will require courage from both the
Administration and Congress, as we cannot move forward without compromise. We
know compromise is possible. The December tax agreement proves that we are
capable of forging agreements that move our economy forward.
There is no doubt that Members of this Congress in both parties and both
houses have many good ideas of their own for promoting fiscal sustainability.
While we believe the President's Budget is appropriately balanced in its
priorities, we look forward to working with you to make a commitment that
reflects our common ground -- creating American jobs and promoting long-term