It is a tremendous victory for free market activists that, for the first time in history, the debate over raising the debt limit became a debate over cutting spending. For that, we should be heartened that our efforts are truly making a difference. But we must continue to fight, because this deal is simply inadequate to the size of the fiscal challenge our country faces.
Ratings agencies have consistently called for at least $4 trillion in cuts to avoid a downgrade -- and rated the Boehner and Reid bills on which the final deal was based as inadequate for putting the country on a sound fiscal footing. This deal includes only $0.9 trillion in guaranteed cuts and in a best case scenario envisions an additional $1.5 trillion in cuts. And these are Washington cuts, not real cuts; they merely reduce the expected rate of increase in spending, while the federal government will continue to grow.
Moreover, the trigger mechanism relies on cuts to Medicare provider payments that are unlikely to generate any real savings given the experience with the failed Sustainable Growth Rate that is routinely "fixed" by annual legislation. The exemption of Medicaid will allow ObamaCare's enormous expansion of the program to continue unaffected.
Additionally, the new super committee could propose significant new tax hikes, especially increases in business taxes, always a bad idea but especially now, when high rates are already undermining our competitiveness and the economy is still weak.
While we appreciate that the debate has been focused on the right problem of spending and has considerably improved from earlier bipartisan proposals, we must remain firm to our commitment to the Cut, Cap, and Balance approach as the only way to genuinely solve the problem of out-of-control spending. Until strong balanced budget amendment has been adopted, we urge Congress to vote no on authorizing any additional debt.