Senators to Obama: What's the Debt Ceiling Plan B?
CNBC Senior Talent Producer
A long weekend does a body good. It recharges your batteries, allows you to catch up on unfinished business, and so on.
But if you're a member of the U.S. Congress, the extra day loafing around apparently didn't help you come up with new ideas for balancing our nation's check book. The finger pointing continues and the Obama Administration is passing the beleaguered buck to Congress.
With no resolution in site and August debt ceiling deadline looming, one wonders why Congress gets to take off in the first place. One of the biggest questions out there right now is a "contingency plan". The good ole Plan B. Does the White House have one?
Senator Ron Johnson (R-WI) along with 22 other Senators recently signed a letter to the President (pls put letter link here) asking him just that. I caught up with the Senator on what response he may have gotten from the President and what he fears as both sides try to come up with a compromise.
LL: You sent a letter to President Obama calling for a contingency plan if the debt limit isn't raised. Have you heard back from him?
Sen. Johnson: No.
LL: What kind of contingency plan would you like to see in place?
Sen. Johnson: Most importantly, I’d like to see President Obama stop the scare tactics and make an honest effort to work with Congress to pass a debt ceiling that includes hard caps on future federal spending.
Regarding contingency, I'd like to see the type of plan that any family or business would have to implement in the event of a significant loss of income. A business analogy is probably best.
When a business loses a large customer or suffers a worker strike, it has to make some tough choices. It might shutdown non-essential departments, and keep other parts of its operations open with skeleton crews. It makes these decisions on a priority basis, trying to maximize available resources and minimizing any long term damage to the organization.
The federal government should do the same thing. Why should it be immune from the same discipline ordinary citizens are subject to?
Working with Congress, the Administration should allocate expected revenue ($2.6 trillion for FY2012) among budget categories, and then direct the agency heads to develop contingency spending plans to ensure maximum governmental service and efficiency. Going beyond the absolute date of reaching the debt ceiling does not have to be a crisis if we adequately plan for it.
LL: What is your greatest fear if there is no contingency plan?
Sen. Johnson: That the Administration will play politics with available funds, rather than maximizing the effectiveness of those funds. By withholding funds from some of the most wanted programs, the Administration can make a “Debt Ceiling Budget” quite painful for the American people. It would do so for the purpose of forcing Congress to increase the debt ceiling without obtaining the structural reforms needed to finally get our fiscal house in order.
LL: Do you think the White House is using fear as a way to get things done in regards to the debt ceiling?
Sen. Johnson: Yes. I have no other explanation for Secretary Geithner’s recent statement regarding the Administration’s fall back
plan: “Our plan is for Congress to pass the debt limit. Our fallback plan is for Congress to pass the debt limit, and our fallback to the fallback plan is for Congress to pass the debt limit.” In other words, they have no plan. That's unbelievably irresponsible.
LL: You said, "All spending programs must be on the table to achieve the structural reform necessary to avert a real debt crisis." What would be the first five programs you would like to see reformed?
Sen. Johnson: As I travel around Wisconsin, I ask younger workers (unfortunately for me nowadays, that means folks 45 and younger) "What do you expect to get out of Social Security and Medicare"? Their answer is always the same, "Nothing". That simply is not fair.
These workers are paying into a system that they recognize is going broke, and they have no expectation of future benefits. This tells me is we don't have to be afraid of addressing these issues because we actually have a pretty receptive audience for real reform.
We all want these programs to survive, and in order for that to happen, we need to act now. It is also important to note that no one is talking about changing these programs or benefits for current retirees or those individuals close to retirement (55 years and older).
We should look at the unfunded liability of each program to determine the priority of providing long-term structural reform and survivability. The aging of the Baby Boom generation and the explosion of health care costs show us that Medicare is the most vulnerable program. Delaying action will only make solving the problem more difficult in the future.
Obamacare should be repealed because it will also add trillions to our deficits were it to be fully implemented. Defense spending should also be thoroughly reviewed both strategically and operationally.
Medicare, Medicaid, and Social Security will need to be structurally reformed to bring them into balance and guarantee that they will exist in years to come.
In addition, Senator Tom Coburn has done an excellent job of forcing Congress to look at the duplication, inefficiency, and waste throughout the Federal government. With a $1.5 trillion deficit this year, and our nation's debt fast approaching 100% of GDP, we simply cannot afford inefficient and ineffective government. I intend to be a strong ally of Senator Coburn in his fight to rein in the size, scope, and cost of government.
LL: You voted for Paul Ryan's 2012 budget. Five of your GOP colleagues did not. How fractured is the GOP party and what is needed to get everyone back on board?
Sen. Johnson: From what I have witnessed over the last five months, I think Republicans in Congress are remarkably unified. There may be slight differences in proposed solutions, but there is a great deal of unity in our recognition that our fiscal problems are urgent and that we must begin addressing them immediately.
LL: Do you think Congress has the political will to make the tough decisions?
Sen. Johnson: I certainly do. I am very disappointed to say that I don’t see that commitment from the other side of the aisle. As evidence of that fact, the Democratically controlled Senate has not passed a budget in 762 days, and just voted against President Obama’s
FY2012 budget 0-97. Let me repeat that: ZERO to 97. That is a stunning rejection of the Administration's budget proposal that took thousands of man-hours to prepare and was unveiled as THE solution to our long term fiscal problem. We all recognize that there is only one person in America that can sign a bill so that it becomes law.
Without genuine Presidential leadership, and there has been none to date, we will not be given the opportunity to make those tough choices.
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
Questions? Comments? Email us atNetNet@cnbc.com
Follow on Twitter @ twitter.com/loriannlarocco
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC