Many Oklahomans are asking whether we will go over the so-called fiscal cliff at the end of the month when taxes will go up for everyone and automatic spending cuts will go into effect.
The fact is, the nation already went over a fiscal cliff more than two years ago when the size of the national debt reached 90 percent of the size of our economy. Today, our debt-to-GDP ratio is more than 120 percent if you count all debt — federal, state and local. The debt load is the reason why we haven't had a real recovery. The economy is struggling to grow faster than the rate of inflation; the unemployment rate is close to 8 percent.
With the fiscal cliff already behind us, we're being held aloft by the momentum of our past success. The question is whether we're going to have a hard or soft landing.
I've long argued for dealing honestly and aggressively with the true scope of our challenges. That's why I released a plan last year called “Back in Black” that saves $9 trillion over 10 years and gives us a balanced budget within a decade.
Even though the president's Simpson-Bowles deficit-reduction commission (on which I served) offered less in savings than I preferred ($4 trillion), I still supported it as a down payment. Unfortunately, President Obama abandoned the recommendations of his own commission.
Obama claims to want a balanced approach yet is now focused on raising tax rates. If the president succeeds in raising rates on everyone making more than $250,000, he'll raise $68 billion next year, which is less than 7 percent of this year's $1.1 trillion deficit. When we're borrowing $3.6 billion a day this is enough to keep the government running for less than three weeks. In other words, the president's so-called balanced approach is based on 93 percent borrowing and 7 percent tax rate increases.
The president and his party have abandoned a balanced approach. They believe Republicans have no leverage to stop automatic tax rate increases on Jan 1. They're probably right. If current tax rates go up for everyone, including the middle class, Republicans will share a disproportionate amount of the blame and rates will still go up for high-income earners.
The president, however, is playing a dangerous political game. Any approach that doesn't deal with the true driver of our deficits — entitlement spending — isn't balanced. In just two years, entitlement programs such as Social Security disability could start going bankrupt. Ignoring this looming crisis will trigger a debt bomb that will wipe out the middle class.
Many of my Republican colleagues are willing to accept additional revenue, either through closing loopholes or even tax rate increases, if that's what is required to persuade the president to save our economy.
Policymakers in Washington can solve this problem if we act quickly, and like adults. This starts with acknowledging that a balanced approach involves two willing parties, not one.
Coburn is a Republican from Muskogee.