The Jury Is No Longer Out

by: John Wisniewski

Wed Aug 10, 2011 at 03:10:50 PM EDT

The jury is no longer out. The cut and hope policies of the current crop of tea party conservatives simply doesn't work in the real world, and neither does their delay and obfuscate strategy for derailing the Obama Administration. The recent downgrade of America's sovereign debt should serve both as evidence of this, and warning for future fiscal cycles.

While Standard and Poor's doesn't make policy recommendations, it is telling to look at their report and see what caused them to downgrade America's bonds. It denounces the "political brinksmanship" that led our statutory debt to become "political bargaining chips in the debate over fiscal policy." It notes that "modest" savings are identified but "new revenues have been dropped down on the menu of policy options."

A major difference in this rating and previous ratings is that the new base projection assumes that the Bush tax cuts will remain in place indefinitely. This is because "the majority of Republicans in Congress continue to resist any measure that would raise revenues." That resistance, if unchecked, is expected to push our total debt to as much as 85% of GDP by 2021. Conversely, simply allowing the Bush era tax cuts on "high earners" to expire in 2013 would trim seven percent off of that figure. The $89 billion from this measure alone is more than four times the $21 billion being cut from the 2012 budget.

It is also helpful to look at what Standard and Poor's actually says about AAA rated countries, like Canada, France, Germany, and the United Kingdom. When adjusting for the size of each country's economy, the UK already has more debt than we do, and France's debt is not only bigger than ours, but expected to continue growing through 2014. So the problem is not the debt and it isn't that the debt is growing. It's that Republicans refuse to allow any revenue increases that will actually address the structural issue of spending more than we bring in.

The reality is that the federal government's spending accounts for roughly 24% of our GDP, but our tax revenues are only enough to cover 15% - a historic low! By way of comparison, in 1985, American tax revenues as a percentage of GDP were 25.6%. If Republicans would simply roll taxes back to the level they were during Ronald Reagan's Presidency we wouldn’t have this problem. But wave after wave of tax cuts have failed to reduce the federal debt one penny! In fact, they have only increased the problem exponentially.

Republicans can stomp their feet and scream their ideology all they want, but facts are stubborn things. The fact is that America cannot cut its way out of debt. It must use a balanced approach that prioritizes our spending, controls runaway expenses, and enhances our ability to pay our bills. That isn't my conclusion: it's what Standard and Poor's told us.

Cross Posted at The Bray, John Wisniewski is an Assemblyman from the 19th District and Chairman of the New Jersey Democratic State Committee