Today, Congressman Jerrold Nadler (D-NY) spoke on the House floor in strong opposition to the GOP-sponsored Cut, Cap, and Balance Act, an extremist legislative attempt to end Medicare, Social Security and other critical programs, and divert lawmakers from the true causes for the federal budget deficit.

“Regardless of what other parts of this bill say, there is no way to meet these goals without destroying Medicare, Medicaid, Social Security, veterans’ programs, and military preparedness,” said Nadler.  “That’s just arithmetic, and no amount of rhetoric will change it….Let’s manage the budget the old fashioned way: by making hard choices, by promoting growth, by making everyone pay their fair share of taxes, including billionaires and oil companies.”

The following is the text of Nadler’s statement, as prepared:

“Mr. Speaker, this bill promises all the fun of a constitutional amendment without actually amending the Constitution.  It simply says that the U.S. should default on our debts and destroy our economy if we don’t amend the Constitution.

“If we default on our debts, we will do more damage to our economy than large deficits, tax increases, and draconian cuts combined.  Right now, we enjoy very low interest rates because we are still the most stable, reliable, and wealthy country in the world. 

“If the markets get the idea that we are too dysfunctional to pay our debts, even though we are certainly wealthy enough to do so, nothing else will matter.  Interest rates will climb, homeowners and businesses will be pushed out of the credit market, and the stock market will crash.

“Never before in the history of this nation has anyone been irresponsible enough to play chicken with our full faith and credit.  Never.

“We know how to balance the budget, because we’ve done it before.  In the not-too-distant-past, we managed – working with President Bill Clinton – not only to balance the budget, but to run surpluses and begin paying down the debt.

“Unfortunately, President Bush and a Republican Congress managed to turn record surpluses into record deficits in record time. 

“Rather than admit to serious Republican economic mismanagement, and finding responsible solutions, we get this dusted-off quack cure from the past.

“The so-called Balanced Budget Amendment requires a balanced budget much sooner than does the Republican budget that the House recently passed – the one that abolishes Medicare and turns Medicaid into a block grant.

“I asked the sponsor of this bill, the Gentleman from Virginia, how he thought this could be done.  His answer was that the Republican Study Committee budget – which is even more radical than the Ryan budget – would be in balance in just nine years.  That’s what we’re really voting for today: an accelerated version of the RSC budget.  Anyone voting for this should be prepared to go home and explain that vote, including Republican members who voted against the RSC budget.

“Economists have long known that in good times you should balance the budget and pay down the debt, but that in a recession, when tax revenues plummet and the economy contracts, you have to spend money on unemployment insurance and to put people back to work.  You must run a deficit to get the economy going again.  The Balanced Budget Amendment would force you to do the exact opposite – and turn every recession into a depression.

“And this constitutional amendment does a whole lot more than require a balanced budget.  Much of this amendment has nothing to do with balancing the budget.  Many of its provisions simply cement into the Constitution the policy preferences of the current majority, and bind our children and grandchildren into those preferences.

“The two-thirds requirement to increase revenues would have the perverse effect of allowing special interest tax loopholes to be slipped into law with a majority vote, but would require a supermajority to repeal them.  That is not just antithetical to a balanced budget, but it would also cement the most corrupt aspects of our Tax Code into the Constitution.

“The Amendment would also require a two-thirds vote for any budget that exceeds 18% of GDP.  According to CBO, ‘Outlays have averaged close to 21 percent of GDP over the past 40 years.’  Federal outlays have not dropped below 18 percent since 1966 – that is, since the enactment of Medicare.

“Regardless of what other parts of this bill say, there is no way to meet these restrictions without destroying Medicare, Medicaid, Social Security, veterans’ programs, and military preparedness.  That’s just arithmetic, and no amount of rhetoric will change it.

“The real problem is that tax revenues – which were 20.6% of GDP in 2000 – are now only 14.5% of GDP, because we no longer tax the millionaires, the billionaires, and the large corporations the way we used to.

“Let’s manage the budget the old fashioned way: by making hard choices, by promoting growth, by making everyone pay their fair share, including billionaires and oil companies – and not with phony constitutional amendments which promise balanced budgets without showing how, but protect the millionaires from paying their fair share.”

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