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Received this today from New Hampshire tea party senator. Who knew it would be possible to elect someone to the right of Judd Gregg? RW Granite staters managed it.
A quick run-through shows some glaring errors, the conflation of the debt ceiling with budget issues, and good old TP fear-mongering. To paraphrase FDR, All we have to fear is. . . everything! Or Monty Python: "Run away. . . "
Have fun with it.
Thank you for contacting me regarding our grave fiscal crisis. I appreciate hearing from you.
For weeks, Americans followed closely the debate in Washington about raising our nation's debt ceiling, which culminated in a final bipartisan debt limit agreement. I know that it was difficult and often frustrating to watch the process unfold, but this discussion could not have been more important for the future of America.
At the outset of this debate, I said we owed it to the American people to confront two issues: (1) avoiding default and (2) addressing the fundamental drivers of our debt crisis once and for all. I was deeply concerned that by only addressing default, we would signal to the world that the United States was not serious about correcting its fiscal trajectory, and, as a result, this failure would lead to a downgrade in our nation's credit rating. That is why I could not in good conscience vote for the final debt limit agreement, which continues to perpetuate the culture of overspending and borrowing in Washington.
Unfortunately, my fear of a possible downgrade in the absence of serious fiscal reform came to fruition when Standard & Poor's lowered our nation's rating from AAA to AA+, the first time in history the United States of America has been downgraded by a major credit rating agency. While some have questioned the legitimacy of Standard & Poor's analysis, the stubborn fact remains that immediate action is necessary to significantly cut spending, strengthen our entitlement programs, and implement fundamental budget reforms to end business as usual in Washington. As Standard & Poor's noted, "the downgrade reflects our opinion that the fiscal consolidation plan falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." I could not agree more.
Today, our total national debt stands at $14.5 trillion, or $124,000 per household, and we have seen three years of trillion dollar-plus deficits - with no end in sight. The final debt agreement allows our debt to increase to $16.7 trillion within the next year and a half. As we continue to borrow 40 cents of every dollar we spend, nearly half of our debt is foreign-owned, and our largest debt holder is China. A generation ago, just five percent of American debt was held by foreign nations. By continuing to spend beyond our means, we are rapidly ceding our fiscal autonomy to Chinese bankers and foreign financiers, many of whom do not share our priorities or our values.
This year, we are projected to spend $196 billion on interest payments to our debtors. If we do not change course, the non-partisan Congressional Budget Office (CBO) conservatively estimates debt payments will grow by more than 300 percent (to over $800 billion) in the next 10 years. Even worse, for every one percentage point increase in interest rates, CBO estimates that $1.3 trillion will be added to our mountain of debt. As spending on interest payments grows, there will be less money for domestic programs such as national security and health care.
Equally alarming, America's gross debt is equal to 100 percent of our economy. Some may ask why this matters. The answer can be found in an acclaimed study by economists Carmen Reinhart and Kenneth Rogoff, who concluded that, over the past two centuries, nations with gross debt levels above the 90 percent threshold will experience dramatically diminished economic prospects, including lower job growth and fewer economic opportunities.
Despite this grim outlook, it has been more than 830 days since the Senate last passed a budget plan. During that period, the nation has spent more than $7.3 trillion, including more than $439 billion in interest payments on the debt, and the national debt has increased by over $3.4 trillion. Now more than ever Congress must pass a responsible budget.
Unfortunately, some members of Congress and the administration continue to believe higher taxes are the answer to our fiscal crisis. With 9.2 percent unemployment and 25 million Americans unemployed or underemployed, the last thing we should do is raise taxes on families and businesses. Instead of raising taxes and harming our fragile economy, I support efforts to overhaul our complex tax code, and I welcome a meaningful discussion that focuses on tax reform that makes our code fairer. Federal tax reform should broaden the base and lower individual tax rates, increasing revenue though economic growth. I also support reducing the corporate tax rate to make our nation more competitive and eliminating corporate tax loopholes and subsidies that do nothing to improve economic growth.
As a member of the Senate Budget Committee, I am committed to addressing our fiscal crisis and making the hard decisions to reduce our short and long-term spending. One of the most important steps Congress can take to force Washington to tighten its belt is to pass a Balanced Budget Amendment to the Constitution. Putting Washington budgeting into perspective, the average New Hampshire household earned $63,000 in 2008. Using Washington logic, they would spend over $102,000 annually, which is over $39,000 more than they earn. This rate of borrowing and spending is fiscally unsustainable and irresponsible. That is why many of my Senate colleagues and I have pushed for a vote on this key spending reform, which would require the President to produce a balanced budget each year and ensure that Congress lives within its means, just like New Hampshire families do. I am pleased that the debt limit agreement will require a vote in the coming months on the Balanced Budget Amendment, and I am hopeful that my colleagues on the other side of the aisle will support this effort - just as our allies in Italy recently have embraced a similar balanced budget measure as a critical austerity tool.
Congress also needs to put in place a strict cap on federal spending. I am a cosponsor of bipartisan legislation that would establish a 10-year path to cap all spending to a declining percentage of the gross domestic product (GDP). This plan would eventually reduce spending from its current level of 24.1 percent of GDP to its 40-year historical level of 20 percent. This is a commonsense proposal that should be passed. I am also a cosponsor of the Cut, Cap and Balance Act, which would achieve similar reductions. Unfortunately, the final debt limit agreement only capped discretionary spending and failed to tackle mandatory spending. In doing so, the agreement punts 98 percent of baseline spending reductions until after 2012, and 79 percent until after 2015. In fact, only $7 billion in discretionary spending would be cut between 2011 and 2012, and overall discretionary spending would still increase by $830 billion over the next decade.
Additionally, the President must take a leadership role by presenting a plan that preserves our entitlement programs. Both parties need to work together to put these programs on a sustainable path for current and future beneficiaries. Without reform, Social Security and Medicare - programs critically important to New Hampshire seniors (including my parents and grandparents) - will go bankrupt. The Medicare and Social Security Trustees have reported that these programs are rapidly headed for insolvency as early as 2024 and 2036, respectively. The Government Accountability Office recently reported that our total unfunded liabilities for entitlement programs over the next 75 years are $99.4 trillion, or $846,000 per household. If we stay on our current course, these programs will be nonexistent for our children and grandchildren and, along with Medicaid, will grow to consume every dollar of revenue our government collects. Until Congress and the administration address these key drivers of our long-term debt, we will continue to risk our nation's long-term fiscal sustainability.
If we do not act soon, our country could go the way of Greece, Ireland, Portugal, and Italy, which have been forced to take severe austerity measures due to decades of poor spending decisions. I believe it is necessary to reduce our deficits to ensure that we do not suffer the same fate. The President's own fiscal commission warned that if we do not take swift and serious action to address our rising debt, the United States will face "the most predictable economic crisis in history." That is why I am committed to making the difficult decisions to reduce spending in order to preserve the economic strength of America for our children and grandchildren. We must act now.
On a final note, I continue to believe in the greatness of America. There has never been a challenge this country has faced that we have not met and overcome. I remain hopeful that both parties will act together to preserve the greatest country on earth.
Again, thank you for taking the time to contact me. As your Senator, it is important for me to hear from those I represent regarding the current issues affecting New Hampshire and our country. Please do not hesitate to be in touch again if I can be of any further assistance.
Sincerely,
Kelly A. Ayotte
U. S. Senator
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