Congress must move quickly to pass a bill cutting the deficit and helping Americans struggling with rising prices. The Congressional calendar is very short, and soon the opportunity will be lost.
The Congressional Budget Office, (CBO) recently released its annual budget report with much more bad news about government debt. Although the deficit temporarily drops for two years, the debt picture over the next decade and beyond is very bleak. According to the CBO, in just five years, our national debt will reach the size of our entire economy, and by 2032 our net debt will grow to an astronomical $37 trillion — something that’s only happened once in our history, at the end of World War II. Meanwhile, inflation is over 8 percent, its highest point in 40 years, with gas prices at record levels.
But finally, there is hope Congress will begin to address both the debt crisis and high prices. Congressional Democrats are crafting a deficit cut package without imposing the large cuts to vital domestic benefits many others have long demanded. By raising revenue and cutting the deficit, it would also bring some relief to Americans battling inflation.
Such a bill must pass as a budget reconciliation measure to avoid an almost certain Republican filibuster — and the opportunity to use the reconciliation process expires on Sept. 30. But there’s even less time than that to get it done. With members of Congress home for August and much of the fall because it’s election season, Democrats really need to finish work by the end of July. Kicking the can down the road to a post-election lame duck is not an option since reconciliation at that point will be unavailable without a new budget resolution, which is not in the cards.
Recent Democratic efforts to pass a budget package collapsed because the White House, progressives and two moderate Senate Democrats including Joe Manchin (D-W.Va.) could not reach a deal. But this time, Sen. Manchin is engaged with Senate Democratic leaders in talks supported by the Biden administration. The talks have dragged on for several weeks and need to conclude soon before the clock runs out.
Every American should be concerned about our ever-growing deficits and debt. Large deficits, going back to Ronald Reagan, can fuel inflation and slow economic growth by boosting interest rates. Higher rates, in turn, can discourage businesses from borrowing to create new jobs and hurt consumers using credit cards. High debt also risks our national security because it makes us vulnerable to foreign lenders. China alone holds $1 trillion in U.S. bonds.
Our mounting debt means taxpayers must shell out $8 trillion over the next decade to bond holders in return for lending us the money. To put that in perspective, that debt service cost is almost 50 percent greater than all federal spending last year. Not a penny of that goes for new schools, struggling seniors or sick veterans. Just the opposite, high debt service squeezes out money to fund those needs.
Escalating debt even risks budget cuts for those services. I saw this first-hand as the House Budget Committee Democratic staff director for 20 years. The last legislation to substantially reduce the deficit in 2011 cut discretionary spending targets by $900 billion which threatened essential programs like Head Start, Pell grants for college students, environmental clean-up and veterans’ health care.
The Democrats’ budget package would achieve as much as $700 billion in deficit reduction through tax hikes on corporations that have avoided paying their fair share, stricter tax enforcement and Medicare drug cost savings. While it’s a modest step relative to the size of the problem and much more work remains, this new effort represents real progress.
The package would also importantly help Americans battling high prices because lower deficits should result in lower consumer demand. The bill would also assist seniors struggling with skyrocketing prescription drug costs. It would also help working families with medical bills by extending subsidies for critical Affordable Care Act insurance premiums slated to sharply increase before the end of the year. Finally, the plan would reduce energy costs and contribute to the battle against climate change by creating tax breaks for clean energy technologies.
This new CBO report and the pressing need to address high prices should serve as clarion calls for action. Democrats need to put these talks on a fast track by passing it before time runs out.
Thomas Kahn was the Democratic Staff Director of the House Budget Committee from 1997-2016. He is now a distinguished fellow at American University’s Center for Congressional and Presidential Studies. He also works at the Cormac Group.