Cantor: No to Closing Tax Loopholes, Yes to BBA That Raids Social Security
Yesterday House Majority Leader Eric Cantor (R-VA) announced that he would no longer participate in the budget negotiations led by Vice President Biden, in which members of both parties have been working on a plan to reduce the federal deficit in conjunction with raising the debt limit (which must be increased by August 2 for the U.S. to avoid default). According to Cantor himself, “trillions in spending cuts” – a core Republican demand – had been identified over the course of the budget talks. But when the discussions turned to revenue-raising measures, like closing corporate tax loopholes and capping tax deductions for households earning more than $500,000 a year, Cantor balked, asserting that “the tax issue must be resolved before discussions can continue.” Although Cantor’s recent votes show he has no problem with, say, cutting food assistance for low-income women and children, I guess the very thought of asking oil companies, giant corporations, or the super-rich to contribute one dime to deficit reduction was just too much for him to bear.
It is clear that for Cantor and many in his party, the only way to resolve the “tax issue” is to leave taxes untouched (unless, of course, you want to cut them). And later on Thursday, Cantor announced that he would be bringing up a measure to achieve just that outcome: H.J. Res. 1, the balanced budget constitutional amendment recently approved by the House Judiciary Committee. Cantor plans to bring H.J. Res. 1 to the House floor the week of July 25. As we reported earlier this month, H.J. Res. 1 would make it virtually impossible for Congress to ever raise taxes by requiring a two-thirds vote in both chambers to increase revenue in any way. At the same time, it would cap federal spending at dangerously low levels. Though the amendment does not identify any specific program cuts, the cap would inevitably force steep reductions in funding for programs vital to women and families, including Medicaid and Medicare. Even aside from those radical provisions, any constitutional amendment requiring a balanced budget every year would cripple the government’s ability to respond to new challenges, economic downturns, natural disasters, and other emergencies.
In addition, any amendment providing that “total outlays for any fiscal year shall not exceed total receipts for that fiscal year,” as all the currently proposed balanced budget amendments do, would effectively authorize a raid on the Social Security Trust Fund. Under the amendment, Social Security revenues and benefits would be treated just like other revenues and benefits – even though Social Security has sufficient dedicated revenues and assets in its Trust Fund to pay 100 percent of promised benefits until 2036. The surplus contributions of workers and employers over several decades have built up a Trust Fund that now exceeds $2.6 trillion to prepare for the retirement of the baby boomers – but Social Security could not draw on those reserves unless the rest of the budget ran an offsetting surplus.
A balanced budget amendment is a terrible idea and a remarkable illustration of the lengths to which Cantor and like-minded lawmakers will go to avoid even considering higher taxes on the individuals and corporations who can most easily afford to contribute to deficit reduction. Any fair and fiscally responsible deficit reduction plan must rely on revenue increases at least as much as spending cuts, especially since tax cuts are a primary driver of existing and projected deficits. Low-income women, men and children who depend on government programs did not cause the deficit and must not be the ones who sacrifice to reduce it.