WASHINGTON — A moderate House Democrat from a key swing district is floating ideas for a short-term debt limit compromise and separate deficit reduction plan that includes policy proposals designed to appease both parties.
Rep. Jared Golden, D-Maine, co-chair of the fiscally conscious Blue Dog Coalition, wrote a letter to his constituents, published on his Substack page, to explain his policy views on the national debt and the debt limit. He said this is the first of what he plans to be a series of letters to explain his policy and political views “in a more in-depth way.”
In the letter, Golden proposed a framework for connecting the debt limit to caps on discretionary spending. He said Biden and McCarthy should negotiate a two-year budget deal that would set topline numbers for appropriations in fiscal years 2024 and 2025.
Congress could then pass a short-term debt limit suspension bill that would enact those toplines and provide time for appropriators to write fiscal 2024 spending bills to the agreed-upon cap, Golden said. And further debt limit increases could be baked into the fiscal 2024 and 2025 appropriations bills so long as they adhere to the agreed-upon toplines.
Golden also suggested proposals for further deficit reduction over the next two years, but he didn’t specifically connect those to the debt limit debate.
The pitch gets into the weeds of policy that may be lost on many of his constituents. But Golden laid out in layman’s terms the issues surrounding the $31.4 trillion national debt and why everyday Americans should care. The national debt drives up interest rates not only for the government but also for consumers financing homes, cars, student loans and ordinary expenses on their credit cards, he explained.
Golden also summarized the current political dynamics in the debt limit standoff and argued that neither party is serving the best interests of the country with their hard-line positions. He urged President Joe Biden and top Democrats to drop their stance against negotiating around the debt limit and Speaker Kevin McCarthy and Republicans to dial down their “extreme focus on cuts to government spending.”
If both parties move away from their corners, they can “cut to the chase” and negotiate in good faith to get a deal acceptable to both sides, Golden said.
The middle-of-the road approach makes sense coming from Golden, who is to the right of many Democrats on some policies, especially fiscal issues.
Golden ousted a Republican incumbent, Bruce Poliquin, to win election to Maine’s 2nd District in 2018. The race was close, with Golden winning by just over 1 percentage point. Two years later, Golden beat a new Republican candidate by 6 points, while former President Donald Trump carried the district over Biden by the same margin. Poliquin came back for a rematch in 2022, but Golden won that race by 6 points too.
Middle ground on appropriations
While leaving room for negotiations, Golden offered some specifics of what a bipartisan budget and debt limit deal could look like.
Biden has proposed increasing overall discretionary spending in fiscal 2024 by $76 billion, while House Republicans are seeking $129 billion in cuts by pushing to return to fiscal 2022 levels, he wrote.
“I think the FY22 budget topline adjusted for last year’s inflation would be a good compromise,” Golden said. “In other words, allow spending to go up with price increases, but reverse the additional spending increases Congress passed on top of that.”
That plan would amount to a $17 billion cut from the current fiscal year, Golden said. While his figure is a little closer to Biden’s position than the GOP’s, lawmakers in both parties want to spend more on defense than Biden proposed, so Golden’s figure allows some room for that.
Whatever topline number negotiators settle on for fiscal 2024, Golden suggests freezing that for fiscal 2025 to “provide predictability and send a signal that Congress is serious about the nation’s fiscal stability.”
A two-year budget agreement that sets spending at fiscal 2022 levels adjusted for inflation would save about $150 billion over both years. Understanding that’s only a minor dent in the deficit, Golden suggests Congress also set some long-term fiscal goals.
An example he offers is trying to stabilize the debt-to-gross domestic product ratio.
“Since we are on a path for it to reach 118 percent [debt-to-GDP ratio] within ten years, a good goal could be to reduce that to 100 percent,” Golden said, citing a Committee for a Responsible Federal Budget estimate that would require roughly $500 billion in deficit reduction over the next two years.
‘Reasonable approach’
Given that control of Congress is divided, with Republicans leading the House and Democrats leading the Senate, Golden said a “reasonable approach” to deficit reduction would include a combination of spending cuts and revenue increases. Republicans are vehemently opposed to raising taxes, while Democrats are leery of cutting spending, making such a suggestion easier said than done.
Golden offered specific proposals that could achieve a total of $500 billion in deficit reduction, which split equally between spending reductions and revenue increases. He said his estimates, all of which are over two years instead of the usual 10-year measurement, were generated with help from the CRFB and the Tax Foundation, another independent think tank.
On the spending side, Golden would count the $150 billion in savings that would come from his hypothetical two-year budget deal. Other proposals, which have also been floated by Republicans, include $50 billion in savings from rescinding unspent COVID-19 aid and recapturing fraudulent pandemic funds, as well as canceling Biden’s student loan forgiveness plan, which would generate another $50 billion over two years.
GOP lawmakers will be less interested in Golden’s tax increase proposals. He suggests raising $100 billion by increasing the corporate tax rate from 21 percent to 25 percent for businesses with more than $10 million in profits; $85 billion from restoring the pre-2017 tax law top marginal individual rate of 39.6 percent for taxpayers earning more than $400,000, up from 37 percent today; and $65 billion from expanding the 1 percent surtax on corporate stock buybacks and closing other unspecified “loopholes.”
Golden didn’t offer specific deficit reduction suggestions beyond the proposed $500 billion in savings over two years but said “to stay on track” Congress would need to find another $2.1 trillion in savings over five years and $7.2 trillion in 10 years.
“Most politicians would not talk about a proposal like this. They fear the wrath of a thousand interest groups and accusations of being a socialist or a hateful conservative who wants to harm children and seniors,” Golden said. “I don’t blame them. … But, with the costs of inaction worsening each year, we need an honest debate about the nation’s financial future.”
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