“Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.” – Ronald Reagan
Protests planned nationwide at Congressional offices over deficit issue
View video and read full text of President Obama’s speech and full text of President Obama’s speech
View full text of Republican Speaker John Boehmer’s response
July 26, 2011 (Washington D.C.) – In a special address to the nation last night, President Barack Obama invoked the words of Ronald Reagan and urged the American people to let their representatives know if they support a balanced approach to resolving the deficit that would include a combination of deep spending cuts but also ask “millionaires and billionaires” to make some sacrifices to avoid cuts that would hurt senior citizens, students and working people.
Thus far, Republicans have insisted on a cuts-only plan as a condition of raising the debt ceiling to prevent the nation from defaulting for the first time in history on its debts. Republican Speaker John Boehmer insists Congress and the nation must "live within their means" as small businesses and families must do.
The Republican approach “doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all,” the President said; that fact was not disputed in the Republican response, which calls for cuts with no new revenues.
Congress has just one week to raise the debt ceiling, or the U.S. will default on its loans. The debt ceiling has been raised by every president in recent history when needed to honor debts incurred by the U.S, except the Obama administration. President Obama and Speaker Boehner disagree sharply on how to reduce the deficit, but both agree that default would be disastrous.
“The United States cannot default on its debt obligations. The jobs and savings of too many Americans are at stake,” Speaker Boehmer said.
A default would mean the nation’s credit rating would be downgraded and “interest rates would skyrocket on credit cards, on mortgages and car loans, which amounts to a huge tax hike on the American people,” President Obama said. He added that the U.S. would not have enough money to pay its bills, which would affect Social Security checks, veterans’ benefits, and government contracts with thousands of businesses.
President Obama said his approach would “cut domestic spending to the lowest level it’s been since Dwight Eisenhower was President” and would include cuts in defense, slash waste and fraud in health care programs and make modest adjustments in Medicare—as well as asking big corporations and the wealthy to give up some tax breaks.
“Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don’t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for?” he asked.
Republicans in the House have passed what they call the ‘Cut, Cap and Balance’ Act that would slash spending by $1 trillion, according to Speaker Boehmer, and pave the way for a Balanced Budget Amendment to the Constitution. The President has said he would veto the measure should it pass the Senate.
“There is no symptom of big government more menacing than our debt. Break its grip, and we begin to liberate our economy and our future,” said Boehmer, who pointedly did not address the President’s criticism of Republicans’ refusal to ask wealthier Americans to pay a fair share.
Speaker Boehmer faulted Democrats for refusing to make fundamental changes to entitlement programs such as Social Security and Medicare and critized the President for “asking for the largest debt increase in American history, on the heels of the largest spending binge in American history.”
The President, however, noted that in the year 2000, the federal government was left a surplus by the Clinton administration and faulted the Bush administration for sending the debt level skyrocketing.
“Instead of using it [the surplus] to pay off our debt, the money was spent on billions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to the nation’s credit card,” he said. “As a result, the deficit was on track to top $1 trillion the year I took office.” Recession made things worse, reducing revenues and resulting in passage of the Recovery Act that aimed to stimulate the economy and help states prevent layoffs of teachers, police and firefighters. Bailout of financial institutes also exacerbated the debt.
The Recovery Act accounts for 5% of the federal debt. By contrast, Bush-era tax cuts account for 37.5% of the federal debt, while the Iraq and Afghanistan Wars have fueled 11.9%. The economic downturn, resulting in lost revenues, account for 19.8% of the debt. The much-criticized bank bailouts added about 1%. Everything else combined accounts for less than one quarter of the nation’s debt, according to the Center for Budget and Policy Priorities.
The two parties also differ on how long any debt ceiling extension should last. The President wants the raise through the end of 2012. Republicans propose only a six-month extension.
Boehmer accused the President of wanting a "blank check" and said decisions should not be based on "how they affect some politician's chances of getting reelected."
The President said a short term raise would mean that "once again, the economy will be held captive unless they get their way." The President admonished, "This is no way to run the greatest country on Earth. It's a dangerous game that we've never played before, and we can't afford to play it now. Not when the jobs and livelihoods of so many families are at stake."
HOW TO MAKE YOUR VOICE HEARD
If you wish to voice your views on either side of this issue to your Congressional members in the House of Representatives and U.S. Senate, find their phone, e-mail and fax contact information in the "Sound Off" section of our Citizens Action Center. Not sure which district you're in? You can look up your districts by typing in your zip code.
In addition, some organizations opposed to deep cuts in Social Security and Medicaid are staging protests today at Congressional members' offices and are calling for a balanced approach that includes revenue increases to avoid cuts that hurt seniors and others. A protest is planned at the office of Rep. Duncan Hunter (R-El Cajon) at 12 noon today.