Budget Control Act of 2011
Congressman Aaron Schock (R-IL) issued the following statement today after the House of Representatives passed the Budget Control Act of 2011:
“The passage of the Budget Control Act represents a serious shift in the mindset of how Washington has approached raising the debt limit. Congress has rightly focused this debate on how much to cut, instead of how much to spend. This year began with the President’s call on Congress to raise the debt limit by $2 trillion with zero cuts. The President was also insistent on raising taxes. I joined with a majority of my colleagues to focus on cutting spending as opposed to increasing revenue. As a result, the bipartisan legislation cuts trillions of dollars from the debt, doesn’t raise taxes and takes serious steps toward a path of fiscal solvency. This bill also focuses on the critical vote of a balanced budget amendment, which is an important aspect to fixing our problem for the longer term.
“While this has been a frustrating and lengthy process, I think the finished product is something to be proud of. It’s not perfect. In fact, it’s far from perfect, but with divided government neither side gets everything they want. A great number of Republicans and Democrats who joined together in support of this legislation is evident of its support. This bill continues to put our government on track for the first time since World War II to spend less than the previous year.
“America still has a debt crisis, but tonight was a step in the right direction toward putting our budget back on a path of fiscal solvency.”
Background on Budget Control Act of 2011
For the first time in fifteen years, the House and Senate are guaranteed to vote on a balanced budget amendment. In 1996, the BBA failed in the Senate by only one vote. Since then, the debt has grown by $9.2 trillion.
The amended Budget Control Act of 2011 is not the ultimate solution to the nation’s spending-driven debt crisis, but it accomplishes the following three objectives:
Click here to read the Budget Control Act of 2011
Cutting Discretionary Spending
Joint Select Committee on Deficit Reduction
A Step Forward, but a Long Journey Remains
Debt Limit Resources
As you are probably aware, the national debt ceiling is the maximum amount of debt that the federal government can take on. Congress must vote to raise the debt ceiling if the debt exceeds the limit, and since 1996, it has done so 11 times. Under President Obama and the previous House majority, the debt limit was raised 4 times, from $9 trillion to its current $14.3 trillion, a staggering $5 trillion increase in under 3 years. This current debt load is holding back economic recovery. The President’s own economic advisors have estimated that our current debt levels are causing a 1% drag on our economy, and that an increase of just 1% in GDP could create upwards of 1 million jobs.
On May 16, 2011, the debt limit was again reached, and Congress has until the beginning of August to address the issue before the United States Treasury will be unable to cover its expenses.
On May 31, 2011, the House took up H.R. 1954, which would have raised the federal debt limit over $2 trillion with no measures to reduce future spending. I voted against this legislation. It is now clear that meaningful spending reductions and reforms must be included along with any increase in the debt limit. Attaching spending reduction measures to debt limit increases is not unprecedented; in fact it has been done three times before.
Raising the debt limit is a short-term necessity to prevent serious negative consequences if Treasury defaults on its debt. These negative effects would be felt throughout our still-fragile economy, causing a dive back into deeper recession. Economists have estimated that a default on debt by the Treasury would cause the stock market to plunge 3,000-5,000 points, decimating working Americans’ pensions and retirement savings. In addition, the Federal Deposit Insurance Corporation (FDIC) gets the funds it uses to insure banks from failure from the U.S. Treasury. Under normal circumstances, FDIC insures each bank account holder for up to $250,000 of their savings, ensuring that people do not lose all of their savings if their bank fails. If the debt limit is not raised, Treasury will be unable to provide FDIC the funds needed to insure banks, leaving the savings of millions of Americans vulnerable.
Raising the debt limit without budget reduction measures included amounts to condoning the current spending spree in Washington and will only lead to more increases in spending and debt, destroying jobs and putting a drag on economic recovery. I cannot support such an affirmation of the status quo, and will continue to work with House leadership and my colleagues for meaningful spending reductions before considering any increase in the debt limit.
Additional Debt Limit Resources
Debt Limit Analysis
The Gang of Six Budget Effort