Blue Mountains and Budget Cliffs


WINTERGREEN, VA (Oct. 7, 2012)—The Blue Ridge Mountains are spectacular, even on a cold, overcast gray day in October. The leaves are turning color and the tranquility is sedating. Crisp 40-degree temperatures sharpen the senses, but still beckon you outdoors for slow walks and casual conversations.

Congressman Paul Ryan is here, preparing for his debate later in the week with the Vice President, jovial Joe Biden, the man who always says just a little more than he should.

Ryan is probably spending a lot of the prep time on the budget cliff (the mountains are a good place to contemplate cliffs). He is, after all, the chairman of the House Budget Committee and the undisputed guru of Republican thought on fiscal matters. The Ryan Budget is the tabernacle of truth for most conservatives, and a boiling caldron of evil to most liberals.

Despite its name, the budget cliff is a date, not a place. It is, for the most part, January 1, 2013. That day could be cataclysmic if a number of converging budgetary events are not averted. Here is just some of what is at the edge of the precipice.

  1. The government will reach the ceiling on the amount of money it can borrow to pay off what it owes its debtors. The ceiling now stands at $14.3 trillion. We will owe about $16 trillion. If Congress and the President don’t raise the ceiling, the United States will default on its debts, putting us at significant risk.
  2. Congress passed and the President signed into law the Budget Control Act of 2011, which resulted in a Jan. 2, 2013, trigger of automatic spending cuts called sequestration. It could cost the economy as many as 1 million jobs.
  3. President Bush enacted in 2001 and 2003, and President Obama extended in 2011, tax reductions that all expire on Jan. 1. They include income taxes, capital gains taxes, the marriage penalty equalizer, various exemptions for business, the childcare tax credit and a number of others. If those tax cuts are not extended, it will mean a $3.7 trillion tax increase over the next ten years. Put another way, the Tax Policy Center estimates that to be a $3,500 per year average tax on every family in the United States.
  4. Also expiring are another 60 tax provisions called extenders. They include the estate tax, earned income tax credits, tax breaks for college tuition, and many more. If not extended these tax provisions will impose $205 billion in higher taxes on American individuals and businesses.
  5. Also changing is the Alternative Minimum Tax, which if not extended in its present form will raise taxes on about 4 million additional taxpayers.
  6. If Congress doesn’t act, doctors who treat Medicare patients will fall back under a 2003 law that reduces their payments for service by 27 percent. Congress has prevented the cut in doctor payments every year since then, to forestall doctors not treating Medicare patients. Cost of the patch on this program is about $11 billion per year as it has every year.
  7. Also expiring is a temporary reduction of two percent in the payroll tax for Social Security. Extending the reduction will cost $112 billion.
  8. Emergency unemployment benefits expire, too. That will take another $26 billion out of the economy.

Together, the reductions in spending and higher taxes will cause massive economic shock. The U.S. will fall back into recession, putting millions more out of work, setting recovery back for years. That’s not just my opinion, it is the opinion of Federal Reserve Chairman Ben Bernanke, International Monetary Fund Director Christine Legarde, the Congressional Budget Office, credit rating companies, and economists from one end of the spectrum to the other.

The budget cliff is not the only looming fiscal nightmare. The Congress and the President have been unable to adopt a budget for the government in three years. They haven’t enacted individual appropriation bills to fund the government for a decade or more. The temporary ones in place now all expire in March. Major federal programs such as agriculture have not been reauthorized. There is no coherent energy policy and the country is dangerously vulnerable because we haven’t dealt with cyber security issues.

It is no wonder that corporations across the country are not hiring, are not expanding, or not growing our economy because they are uncertain about the future and what government will or will not do to them.

After the Nov. 6th election, the returning, defeated and retiring members of Congress will go back into a lame duck session to address these crises. But what they haven’t been able to resolve in two years, they won’t fix in the 25 days. The only option for them will be to apply more temporary extensions, patches and plugs, pushing the decision-making into the next Congress and onto the shoulders of those who will be elected.

Hopefully, the new Congress will come to Washington with a clear public mandate to end the petty, partisan gridlock and reach consensus on solutions. There really is no other option. And there are solutions. There are paths to compromise on tax increases, parameters for historic tax reform, spending cuts and programmatic reforms in all programs, including entitlements and defense, and reorganization of our governing institutions so that those who want to govern can. That will require new procedures and a greater emphasis on civil discourse and responsible political behavior.

Will there be that willingness to find solutions? When you look back over the decline of our political process and especially the abandonment of truth and the dissolution of the public trust, you have to wonder.

But just when you think political restoration is not possible, you look out onto the Blue Ridge, the clouds floating through the mountainous ridges that seem to stretch forever, and the sun peaking through to cast a laser-like beam onto a little slice of the valley far below. The magnificent wonders of nature right there, steps away from your peaceful perch, and you are reminded that all things are indeed possible, and you hope Paul Ryan is getting the same inspiration.

Editor’s Note: Mike Johnson is a former journalist, who worked on the Ford White House staff and served as press secretary and chief of staff to House Republican Leader Bob Michel, prior to entering the private sector. He is co-author of a book, Surviving Congress, a guide for congressional staff. He is currently a principal with the OB-C Group.