I interviewed Sen. Pat Toomey (R., Pa.) last week about the coming debt-ceiling debate. A part of that conversation follows, and you can read the rest at www.philly.com/toomey
Question: At the end of the debt-ceiling debate, what, in your mind, is the best policy that we wind up with?
Answer: Well, the best policy would be policy that moves us in the direction of getting out-of-control spending under control. The biggest challenge that the federal government faces right now is the completely unsustainable fiscal path that we’re on. It’s a path that innumerable experts have looked at and concluded can only end in a disaster if we don’t get off this path.
And specifically what I mean is, the huge growth in recent spending, compounded by the growth in future spending — if we don’t do anything about the entitlement programs — guarantees a fiscal disaster. You can look at the amount of accumulated debt, which has surged in recent years. For decades it fluctuated around 40 percent of GDP, and as long as that is stable or declining [the debt as a percentage of GDP], then an economy can carry a certain amount of debt….
That is the opposite of where we are now. We’ve got the debt growing much more rapidly than the economy.
And I think it’s actually even worse than what CBO [Congressional Budget Office] projections would suggest. So for all these reasons I think the No. 1 priority has to be getting our fiscal house in order. That’s critical to avoiding a complete calamity and it’s critical in order to maximize economic growth.
So what I want to see on the debt limit is let’s make some progress. I don’t expect to solve all the problems. I don’t expect this in one fell swoop to put us in a perfect fiscal position. But I can’t see how we could let this opportunity go without at least making some progress. So I’m going to unveil a series of measures that I think would be the ideal outcome.
Number one, I think we should put in place a provision that would preclude the possibility even of a default on our debt, under any circumstances. So I can’t control what the president is going to do. I can’t control what the House is going to do. All I can control is my own vote, so I don’t know for sure if or when — eventually we’ll raise the debt ceiling — but I don’t know when.
So I’d like to have a plan in place, a contingency plan if you will, in the event that it doesn’t get raised when the Treasury decides they need it. So my plan would say, under those circumstances, since ongoing tax revenue will still come into the Treasury, and that’s enough to fund anywhere from 60 to 70 percent of the government’s spending, that we would require that the top priorities be interest on our debt so that we don’t default, Social Security checks because of their unique importance, and pay to our active-duty military personnel. And I would further add that in the event that on any given day there were insufficient tax revenue to cover those three things, that the Treasury would be authorized to increase the debt limit by the amount necessary to ensure that they did cover those three things.
Doing that would eliminate any possibility of a default. And it would take any risk away from seniors with respect to their Social Security, and likewise our military….
The second process reform that I would like to see, you know we’re just a couple of months away from the end of the funding of the federal government, the discretionary funding, with the expiration of the continuing resolution (CR). That funding ends. And so, our back is up against the wall. We’ve got another fiscal cliff of sorts, and the threat of another government shutdown. This is a terrible way to run the government. I want to avoid these unnecessary, these manufactured, crises.
So what I’d like to suggest is we have a law in place that says, in the event that any of the appropriation bills, or all of them when they’re all rolled up in a package as is the case with a continuing resolution, if they expire without a replacement having been passed and signed into law, then we have an automatic continuation of the previous year’s spending minus 2 percent, or some other number that ratchets it down, a little bit, across the board.
That would eliminate the uncertainty, and the risk, and the disruption of the end of this funding. It eliminates the risk of a partial government shutdown, which would be better. And it creates incentive for everybody to work together to get a bill done, because most people don’t want an across-the-board cut from the previous year’s level. But if we can’t reach an agreement, then at least we have a little bit of savings, and we go on.
So those are the two priority process reforms that I’d like to see come out of this. And then the substantive policy reform would be, I think, the Boehner rule. It’s a good rule. It’s a rule for which there’s a precedent. It’s a rule the president agreed to the last time we were here, and that is, as you know, for every dollar by which we raise the debt ceiling, let’s cut spending over the next 10 years — not overnight, not from next year’s budget — but over the next 10 years by an equal amount.
I think most of that should come from the mandatory-spending side of the ledger, so to speak, because those programs that are on autopilot are the ones that are problematic. But there are many dozens of them. I’d be very flexible about which and what combination we would address. But that’s how we’re going to bend the [spending] curves and begin to get on a sustainable fiscal path.