Kaine Supported Deal To Avoid Default, And Has Laid Out A Plan To Avoid Defense Cuts

“Deal” GPS Refers To Is The Federal Budget Control Act, Which Created Deficit Reduction Super Committee. From the News Virginian article cited by Crossroads GPS: “The potential of $500 billion in slashed defense spending and the loss of more than 200,000 Virginia defense-related jobs has become a potent issue in the Virginia U.S. Senate race between Democrat Tim Kaine and Republican George Allen. Allen has criticized Kaine’s support of last year’s bipartisan federal budget control act that cut $1 trillion but mandated a congressional supercommittee agree on $1.2 trillion more in cuts. When the supercommittee failed, a half-billion in defense cuts were mandated with the remainder of the cuts to come over a decade from other federal spending. Kaine said the congressional action was ‘the right thing to do.’” [News Virginian, 7/29/12]

• Debt Ceiling Deal Imposed Harsh Defense Cuts Triggered By Super Committee’s Failure As Incentive For Success. From the Associated Press: “The deal between House Republicans, the Democratic-controlled Senate and the OK of the White House, came hours before the deadline for raising the amount of money the government can borrow. As an incentive, the agreement prescribes draconian cuts both parties would find unpalatable — $487 billion to defense over 10 years plus $492 billion in automatic cuts if a bipartisan congressional ‘super committee’ [failed to come up] with $1.2 trillion in savings. The committee failed.” [Associated Press via SFGate.com, 7/24/12]

Kaine Supported Debt Ceiling Deal But Believes We Can Still Find A Way To Avoid Defense Cuts. From the Associated Press: “Republican former Sen. George Allen is airing a new ad that deftly fosters a false impression that his Democratic opponent, Tim Kaine, supports potential deep military spending cuts under a debt-reduction compromise. The ad is rooted in Saturday’s debate between the candidates, when Allen attacked Kaine for supporting a bipartisan compromise in August that allowed Congress to increase the nation’s debt ceiling. […] In the weekend debate, Allen tried to graft the national tactic into his neck-and-neck Senate race against Kaine, claiming that Virginia — home to the Pentagon and the world’s largest U.S. Navy base in Norfolk — could lose more than 200,000 defense-related jobs. ‘George, the deal was the right thing to do — as Eric Cantor said, as Gov. Bob McDonnell said, as the U.S. Chamber of Commerce said,’ Kaine replied when Allen made the charge during the debate. But Kaine was clear in his reply that his endorsement of last August’s stopgap did not extend to approving of the super committee’s failure or of the continued partisan gridlock between House Republicans and Senate Democrats that jeopardizes a deal by year’s end. ‘This is a time when we really have to elevate what we do because the challenges are significant,’ Kaine said in his response. ‘We need people who will come together and try to find a deal and I believe Congress can still find a deal to avoid the need for cuts that are going to jeopardize our nation’s defense.’” [Associated Press via SFGate.com, 7/24/12]

• Failure To Raise Debt Ceiling Could Have Resulted In Default Or Had Other Severe Economic Consequences. From CNNMoney: “A failure to raise the debt ceiling would likely send shockwaves through the underpinnings of the financial system — and possibly ripple out to individual investors and consumers. The federal government would be forced to prioritize its payments. It would risk defaulting on its financial obligations. And if that happens, credit rating agencies would downgrade U.S. debt.” [Money.CNN.com, 7/21/11]
• Kaine’s Opponent, George Allen, Opposed Debt Deal Because Cuts Weren’t Deep Enough. From the Associated Press: “Like Kaine, Republican House Majority Leader Eric Cantor and Gov. Bob McDonnell also backed the August compromise that kept the government from defaulting on its debts for the first time and defused a global financial meltdown. Allen opposed the compromise, saying the cuts would not have been deep enough.” [Associated Press via SFGate.com, 7/24/12]

Kaine: Sequestration Involves “The Wrong Cuts.” From the Suffolk News Herald: “Kaine said he is concerned about the prospect of sequestration, the mandatory, across-the-board cuts the military faces if Congress cannot come to a budget agreement by January. ‘I think I know how to make cuts the right way,’ he said, adding that sequestration would be ‘the wrong cuts.’” [Suffolk News Herald, 4/12/12]

Kaine Has Laid Out Specific Proposal On Avoiding Defense Cuts

Kaine Supports Compromise Deal To Avoid Defense Cuts While Allen Has Stated He Will Not Support Any Compromise Involving Tax Increases. From the Richmond Times-Dispatch’s Virginia Politics blog: “On Monday, Democratic U.S. Senate candidate Timothy M. Kaine laid out his views on how to avoid looming defense cuts, part of the sequestration resulting from the failure of a so-called deficit reduction super-committee. […] In a conference call with reporters, Kaine said congress should create a new plan that would add $1 in new revenue for every $3 in spending cuts. He said that should be coupled with an expiration of Bush-era tax cuts on households earning $500,000 or more, which he said would create more than $500 billion in new revenue to offset cuts. ‘We cannot solve our deficit and debt challenges through cuts alone,’ he said, criticizing GOP rival George Allen’s position, stated in a recent debate, that he would not support any tax increase, even if every $1 of revenue was matched with $10 in cuts. Kaine called that ‘a position that makes compromise impossible and a position that, frankly, also makes solving the deficit also impossible.’” [TimesDispatch.com, 7/30/12]

The Deficit Panel Failed Because Conservative Lawmakers Refused To Compromise

Deficit-Reduction Committee Failed After Republican Members Refused To Budge On Tax Cuts For The Wealthiest Americans. According to the Los Angeles Times: “The committee faced a Wednesday deadline to vote on a proposal to slash the nation’s deficits by $1.5 trillion over the decade. The panel that was brought into existence as a result of the summer debt ceiling fight spent three months in mostly secret negotiations. A deal needed to be posted by Monday evening to provide a 48-hour review. But Republicans and Democrats were unable to compromise on the tax and spending issues that have divided Congress all year, punting the debate to next year’s presidential and congressional campaigns. Republicans refused to substantially raise taxes and wanted to cut federal deficits largely by reducing spending on Medicare and other domestic programs. Democrats wanted a more equal balance of new taxes and spending cuts — a level of taxation the GOP could not accept. A focal point in final days became the George W. Bush-era tax cuts, which are scheduled to expire in December 2012. Republicans wanted to extend those tax breaks for the wealthy and other Americans, rather than carve into that source of new revenue. Most Republican members of Congress have signed an anti-tax pledge with conservative activist Grover Norquist, and were hesitant to agree to new taxes. [Los Angeles Times, 11/21/11]

Bush Policies And Recession – Not The Recovery Act – Created “This Budget Mess”

Prior To President Obama’s Inauguration, President Bush Had Already Created A Projected $1.2 Trillion Deficit For Fiscal Year 2009. From the Washington Times:  “The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn’t enact any new programs. […] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record.” [Washington Times, 1/8/09]

NYT: President Bush’s Policy Changes Created Much More Debt Than President Obama’s. The New York Times published the following chart comparing the fiscal impact of policies enacted under the Bush and Obama administrations:

[New York Times, 7/24/11]

Recession Added Hundreds Of Billions In Deficits By Increasing Spending On Safety Net While Shrinking Tax Revenue. The Center on Budget and Policy Priorities (CBPP) explains: “When unemployment rises and incomes stagnate in a recession, the federal budget responds automatically: tax collections shrink, and spending goes up for programs like unemployment insurance, Social Security, and Food Stamps.” According to CBPP: “The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs. Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook alone accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $300 billion in added deficits, much of it in the form of additional debt-service costs.” [CBPP.org, 11/18/10; CBPP.org, 5/10/11, citations removed]

Over The Coming Decade, The Bush Tax Cuts Are The Primary Cause Of Federal Budget Deficits. The Center on Budget and Policy Priorities prepared a chart showing the deficit impact of the Bush tax cuts (orange), the Iraq and Afghanistan wars, the recession itself, and spending to rescue the economy:

[CBPP.org, 5/10/11]

CBPP: Bush Tax Cuts And Wars Are Driving The Debt. According to the Center on Budget and Policy Priorities:

The complementary chart, below, shows that the Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019 (measured as a share of the economy) if we continue current policies.

[Center on Budget and Policy Priorities, 5/20/11]

“Failed” Recovery Act Created Millions Of Jobs, Boosted GDP, And Cut Taxes

Recovery Act “Succeeded In…Protecting The Economy During The Worst Of The Recession.” From the Center on Budget and Policy Priorities: “A new Congressional Budget Office (CBO) report estimates that the American Recovery and Reinvestment Act (ARRA) increased the number of people employed by between 200,000 and 1.5 million jobs in March. In other words, between 200,000 and 1.5 million people employed in March owed their jobs to the Recovery Act. […] ARRA succeeded in its primary goal of protecting the economy during the worst of the recession. The CBO report finds that ARRA’s impact on jobs peaked in the third quarter of 2010, when up to 3.6 million people owed their jobs to the Recovery Act. Since then, the Act’s job impact has gradually declined as the economy recovers and certain provisions expire.” [CBPP.org, 5/29/12]

At Its Peak, Recovery Act Was Responsible For Up To 3.6 Million Jobs. According to the nonpartisan Congressional Budget Office:

CBO estimates that ARRAs [sic] policies had the following effects in the third quarter of calendar year 2010:

• They raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
• Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
• Increased the number of people employed by between 1.4 million and 3.6 million, and
• Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [CBO.gov, 11/24/10]

Recovery Act Included $288 Billion In Tax Cuts. From PolitiFact: “Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren’t so much spending as money the government won’t get — so it can stay in the economy.” [PolitiFact.com, 2/17/10]