The American people have spoken ‚?? and once again, they have given us divided government in Washington.
Divided government means that neither Democrats nor Republicans will be able to pass legislation along strictly partisan lines. It means that bipartisan compromise is the only way to avoid further gridlock.
In the past, divided government has yielded some historic results. It produced landmark tax reform in 1986 and a sweeping overhaul of our welfare system 10 years later.
Of course, we‚??ve had divided government since January 2011, and thus far it has produced legislative stalemates and bitter recriminations. Why should we expect things to be any different this time around?
Quite simply, I believe there is now a bipartisan recognition that our current fiscal path is unsustainable. We cannot keep running trillion-dollar deficits. We cannot keep postponing structural changes to our largest entitlement programs. And unless we are happy with a tax code that wastes economic resources, stifles job creation and promotes crony capitalism, we cannot keep delaying genuine tax reform.
We don‚??t have to speculate about what bipartisan tax reform might look like.
In 2010, two separate bipartisan commissions recommended lowering the rates and broadening the base, which is exactly what Congress did in 1986.
Yet before we can implement 1986-style tax reform, we need to prevent the largest tax increase in American history, which is scheduled to take effect on New Year‚??s Day and could easily trigger a new recession.
All that Republicans are asking is to maintain the current rates until we adopt real bipartisan tax reform. Remember: These are the same tax rates that President Barack Obama signed into law two years ago. They are the same tax rates that received 81 votes in the Senate at a time when U.S. economic growth was much stronger than it is today. Indeed, if you were worried about the economic impact of a massive tax hike in 2010, you should be even more worried about it in 2012.
The president says raising tax rates would help solve our long-term debt problem, but it‚??s hard to take this argument seriously, for two reasons.
First: According to the president‚??s own Treasury Department, the tax increases he is advocating would generate $85 billion in new revenue next year. By comparison, the monthly budget deficit in October was about $120 billion, and the total deficit for fiscal year 2012 was roughly $1.1 trillion.
In other words, the proposed tax hikes would still leave us with a trillion-dollar deficit. Meanwhile, they would do significant damage to our fragile economic recovery.
Simply put: We cannot tax our way back to budget surpluses and economic prosperity. Without major spending cuts and entitlement reforms, we will continue running huge deficits, regardless of what we do on the revenue side.
After all, our unfunded liabilities over the next 75 years total nearly $100 trillion ‚?? that‚??s trillion, with a T. Those liabilities are separate from our $16 trillion national debt. In the most recent fiscal year, the federal government spent about $220 billion on interest payments alone.
Under the president‚??s latest budget proposal, the annual cost of debt service would reach $804 billion in 2022, an amount greater than total U.S. defense spending in 2012.
This brings me to my second point: Four years after taking office, the president still has not given us a realistic plan for deficit and debt reduction. Last February, his Treasury secretary told the Republican chairman of the House Budget Committee: ‚??We‚??re not coming before you to say we have a definitive solution to our long-term problem. What we do know is, we don‚??t like yours.‚?Ě
It‚??s easy for the president to talk about the need for a ‚??balanced approach.‚?Ě But a truly balanced approach would have to include major spending cuts and entitlement reforms. There‚??s nothing balanced about continuing to spend money we don‚??t have and piling up trillions of dollars in new debt. If the president is going to claim a mandate for governing, then he has a responsibility to offer a genuine solution to America‚??s fiscal challenges. Until he offers such a plan, his posturing over the deficit should not be taken seriously.
Senator Cornyn serves on the Finance, Judiciary, Armed Services and Budget Committees. ¬†He serves as the top Republican on the Judiciary Committee‚??s Immigration, Refugees and Border Security subcommittee. He served previously as Texas Attorney General, Texas Supreme Court Justice, and Bexar County District Judge.