Republican Liberty Caucus Calls Debt Ceiling Deal a Shameful Fraud

Trading Massive New Debt for Unenforcable Promises of Future Cuts is Grossly Irresponsible

AUSTIN, TX -  The plan to raise the debt ceiling agreed on by the House this weekend is a total fraud, a vessel of broken promises, and a gross evasion of congressional responsibility to spend within its means, according to the Republican Liberty Caucus, a national organization of activists with official affiliates in 42 states. The Caucus Board of Directors blasted the latest deal as an insult to the basic American principles of individual liberty, limited government and private enterprise.

“The details will probably be secret until after the law is signed by the President,” says RLC Director Bill Westmiller of California, “but it is certain that it will authorize enough additional debt  to pay the costs of last year’s bailout, the Democrat’s stimulus, all the expenses of ObamaCare, and the continuation of extravagant federal programs implemented by both Republicans and Democrats over the past decade.”

The nearly three trillion dollar increase in the Debt Ceiling will take away all pressure on Congress to implement responsible spending policies for the next eighteen months, ensuring that spending and debt issues will not be prominent during the 2012 campaigns.

“This deal is a blatant violation of the promise from House Speaker John Boehner that every dollar of new debt would be matched by a dollar of cuts,” noted RLC National Chairman Dave Nalle. “All of the cuts are stretched over ten years, while the deficit spending will occur in less than eighteen months,” explains Nalle, “which means that we’re actually getting less than ten cents of current cuts for every dollar of perpetual debt. That’s not a deal, it’s a blank check for bigger government.”

The final plan includes unspecified spending cuts, which would be spread over ten years. For the coming fiscal year, there will be real cuts of less than $100 billion dollars. Since the bill assumes that the same level of reduced spending will continue for ten years, the “savings” are simply added together, for the supposed $1 trillion  of cuts.  There’s no real plan for specific long term cuts.

“Whether it’s one trillion or three trillion, it’s meaningless,” explains RLC Northeast Regional Director Vic Berardelli of Maine. “The Supreme Court has already ruled and all legislators acknowledge, that one Congress cannot impose any obligations on a future Congress,” says Berardelli. “That means that all of the promised cuts are not binding on the federal government after the next election.  They might as well not even exist”

The Supreme Court threw out the Gramm-Rudman Balanced Budget Act in July 1986, as a violation of the Constitution, by a 7-2 vote. Every prior budget authorization must be renewed by the new Congress, or it simply expires.

“There are no real cuts in the debt ceiling compromise,” says California RLC Director David Johnson. “Instead there are just promises of cuts to ‘projected spending,” which is another way of saying they’ve eased up slightly on the accelerator of the car heading for the cliff. These guys aren’t even trying.  I fully understand that the big cuts needed from defense and entitlement are controversial. But where are the smaller uncontroversial cuts? Why are there no cuts in corporate welfare? Why no cuts in foreign aid?”

The main source of added revenue is more than a trillion dollars obtained by auctioning off cell phone frequencies. All of those costs will be passed on to clients of the cell-phone companies with increased prices. Although technically not a “tax increase”, it will produce additional federal revenue that can be applied to new programs or expansions of old programs.

“This authorization, applauded by leaders of both parties, does absolutely nothing to reduce the debt,” says RLC Director Aleq Boyle of Georgia. “The deal actually allows a 50% increase over ten years, from $14.3 trillion to at least $21 trillion by 2021. Even if annual budget deficits were reduced by 100% over the coming decade, the actual public debt and annual interest due will increase more than it has in any prior decade. The pretense that the debt problem is solved is a perverse charade.”

“The fear-mongering about this issue is truly craven,” says RLC Vice Chairman Aaron Biterman.  “Telling people that failure to adopt this huge debt increase will result in U.S. bond rating downgrades, higher consumer interest rates, and possibly cutting entitlement payments. That’s all pure fantasy. The reason that the monopoly federal agencies cut bond ratings is because the interest demanded by the consumers of government bonds has increased, not because an agency lowers their rating.”

Currently, U.S. Federal Debt is nearly 100% of GDP, comparable with Italy (120%) and Ireland (114%). Those countries have had their debt ratings downgraded simply because of the level of their debt in comparison to their GDPs.  Two of the major U.S. ratings agencies say that adding more debt will not prevent a ratings downgrade: the Congress must show an earnest effort to reduce the outstanding debt, not merely the deficit.  This bill does not include enough cuts to offset the massive increase in debt.

“In any case, there is no reason to default on bond debt or interest,” adds Westmiller, “since the government has more than enough incoming revenue to pay all public debt, all pension checks, and everything else enumerated in the Constitution as a federal power. In fact, the Fourteenth Amendment requires that the U.S. Treasury honor all debt instruments and pensions ‘without question’,” says Wesmiller.  “Contrary to the claims of some Democrats, nothing in the 14th Amendment gives the President any power to borrow money at his sole discretion.”

“The most grievous flim-flam in this deal was trashing the requirement that Congress send a Balanced Budget Amendment to the states,” notes RLC Secretary Corie Whalen, “which simply won’t happen. The deal was modified to simply require one vote on the issue, which Democrats will easily defeat in the Senate. That ends any hope that Congress might actually allow the states to make a decision on balancing the federal budget.”

“The entire budget deal is a shameful fraud,” says RLC Chairman Dave Nalle. “It doesn’t do what our leaders say it will do; it allows increased revenues demanded by the President; it only pretends to cut spending, and it gives Democrats the power to force tax increases and other revenue raising measures through a Super Committee before the end of the year.”

“Although this agreement was a failure and a fraud,” concluded Nalle, “some praise goes to the small cadre of newly elected fiscal conservatives in the House, most of whom were endorsed by the RLC.  They at least spoke up for fiscal respnsibiity and forced a change in the terms of the debate. They stuck to their principles in the face of hysteria and doomsday threats. The RLC will be looking for more responsible candidates to join them in the House and the Senate in 2012.”

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The Republican Liberty Caucus is a nationwide grassroots organization which promotes individual liberty and limited government within the Republican Party.   You can find more information about the Republican Liberty Caucus at www.rlc.org