“Why put off what you've go to do? Let’s get the job done - we need to get a plan to manage down the debt and deficit,” House Majority Leader Eric Cantor (R-VA) tells The Daily Ticker on the sidelines of the Milken Institute 2013 Global Conference.
The big debate is about how to do that and when. There's also a question about what the House, Senate, and president can realistically agree to when it comes to a fiscal roadmap for the country (or, arguably, anything other than FAA furloughs).
As we gear up for a budget debate with three competing blueprints and another debt ceiling deadline, Congressman Cantor lays out a couple of cost-saving ideas where he thinks Republican lawmakers could find common ground with the White House. In the accompanying interview, he cites ideas to combine Medicare Parts A and B (hospitals and doctor services) and to reform the federal pension system and bring it more in line with the private sector.
The New York Times reports that Cantor is attempting to remake the image of the Republican Party into something kinder and gentler, to “get beyond its single-minded, green-eyeshaded message of fiscal austerity and look to the problems of ordinary struggling Americans.”
Related: Did Harvard Economists Make an Excel Error that Led to Economic Austerity?
But the fiscal austerity that Cantor and other Republicans espouse has been taking blows from critics, which intensified after often-cited research suggesting economies slow considerably when debt-to-GDP reaches 90% was found to have errors.
Still, Cantor is quick to stress his foremost commitment to belt-tightening. “What I’ve said is we’re not going to abandon our commitment to fiscal discipline,” he says. “Everyone knows you can’t keep racking up trillion-dollar deficits into the future – we’re going to maintain that…We have to take some steps to address what is ailing this country, what is facing the economy and working families.” (Cantor is working on a bill to provide for flex time agreements between employees and their companies.)
Related: CBO 2013 Outlook: Slow Growth, Smaller Deficits
The CBO estimates the U.S. budget deficit will likely hit $845 billion in the fiscal year ending Sept. 30, which is an improvement from the $1 trillion dollar deficits of the prior four years. And this week the federal government reported it would pay down a small portion of the national debt this quarter for the first time in six years. The move is seen as a sign of Washington’s improving finances.
But before we break out the confetti, the U.S. debt still stands at more than $16.7 trillion, topping 104% of GDP, according to Bloomberg. At the same time, the economy is still struggling, with GDP in the first-quarter coming in at a less-than-expected 2.5% annual rate, after growing just 0.4% in the fourth quarter last year. Joblessness remains elevated at 7.6%.
Related: Niall Ferguson to Paul Krugman: You’re Still Wrong About Government Spending
Like it or not, government spending is a large part of the economy. Some argue cutbacks can have a detrimental impact on growth and jobs during fragile times (especially with private sector debt so high).
Others, like Cantor, argue that cutting back the size of government is just what’s needed to unleash the private sector and the time to move forward is now.
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