$earching for the $olution
GRAND FORKS -- North Dakota's congressional delegation agrees the country needs a comprehensive plan to slash deficits and get a grip on the national debt to stave off the looming fiscal crisis.
But Democratic Sen. Kent Conrad and Republicans Sen. John Hoeven and Rep. Rick Berg are just as divided as the rest of Congress when it comes to what should be included in that plan. And time's running out for Washington leaders to strike a deal before the Aug. 2 deadline to raise the debt ceiling and avoid a potentially catastrophic federal default.
Berg said dealing with the country's growing debt and deficits -- which will likely require entitlement reforms, spending cuts and new revenue through changes to the tax system -- is kind of like "turning a big battleship around."
"Congress never does anything suddenly," he said. "We need to move now, and we need to move aggressively."
Berg said it's been "reassuring" to watch the debate over America's economic course change "180 degrees" since January, and there now is nearly unanimous agreement on both sides of the aisle that Congress needs to do something to address the fiscal problems.
But all along, the effort to deal with the looming crisis has remained split between two different sides with two very different approaches.
"What Republicans are saying is we have got to reduce spending and we've got to get economic growth," Hoeven said. "Our feeling is that by raising taxes, you hurt economic growth. Democrats want to raise taxes -- that is a difference, and that's something we have to come to grips with."
Hoeven said it's vital for Washington leaders to take a bipartisan approach as they negotiate entitlement reforms, changes to the tax code and spending cuts to reach a plan both parties can accept.
"We've got to find a way to bring this stuff forward together so one side or the other doesn't just beat up on whatever concepts are put out there," he said. "It's got to be brought forward in a bipartisan way in order for the president and the House and Senate to agree."
But high-profile bipartisan efforts to develop a comprehensive deficit reduction strategy have fizzled out. Negotiations helmed by Vice President Joe Biden came to a halt last month when House Majority Leader Eric Cantor, R-Va., pulled out of the talks, declaring an "impasse" over the tax increase issue.
The so-called Gang of Six, a bipartisan group of senators including Conrad who met for months to strike up a deal, came "extremely close" to a final package of recommendations. But the group suffered a fatal blow in May when Sen. Tom Coburn, R-Okla., declared he was on "sabbatical" from the effort after the senators hit a roadblock over Medicare cuts.
Conrad said the Gang of Six isn't prepared to report its recommendations on how to achieve more than $4.5 trillion in deficit reductions over the next 10 years. And other group members now want to wait and see what happens with top-level leadership negotiations between Democrats, Republicans and President Barack Obama that started last week.
"This is ultimately where it always had to get," he said. "Decisions of this magnitude have to be made by the top leadership and then be brought back to the two chambers to see if it can receive the necessary support."
But Conrad said he's pursued "multiple efforts" all year to address the nation's fiscal problems, and he doesn't want to take any chances the new negotiations will result in something that can be passed before the debt limit comes up for a vote.
Conrad, the Senate Budget Committee chairman, said committee Democrats agreed last Wednesday on a combination of spending cuts and revenue increases to reach an "essential" $4 trillion deficit reduction over the next decade.
Democratic leaders will be briefed on the new plan Tuesday and Obama is expected to meet with Senate Democrats on Wednesday to discuss deficit reduction proposals.
Conrad said he still believes a bipartisan agreement will be the only way to get the necessary votes to enact a tough new approach to reducing the deficit and curbing the federal debt.
But laying out the plan could be another tool in negotiating the final fiscal roadmap that Congress will have to approve, he said.
"I don't see any reason to wait now," he said. "It may be useful to the top-level negotiation that's going on to have another comprehensive plan that's out there for their consideration."
Certainty, not tax hikes
Hoeven and Berg said Republicans will only vote to support a debt limit increase if it includes a comprehensive deficit reduction plan.
Getting the framework in place would help jumpstart the economy, Hoeven said, by providing "legal, tax and regulatory certainty" that could stimulate business investment.
"It's that private investment that generates job creation in our economy," he said, "and I think that right now, private investors, business investors and entrepreneurs are holding back to see what happens."
Berg said the nation's total debt has increased more than 80 percent since 2008 to nearly $14.5 trillion, and America now spends $10 billion a day even though the country only gets $6 billion daily in income.
"We're upside down $4 billion a day and we continue to slip further away from stability every day," he said. "It has to be addressed, and it's not just about the debt limit; it's about how do we get America back on track."
Berg said the Republican-controlled House passed a budget months ago that "really puts us on path" to cut spending and reduce the debt. But the "barrier" to enacting a plan has been Democrats' calls to use tax increases to help make up the shortfall, he said.
"I hope they recognize that and over the next 30 days that they in good faith look at the long-term problems and not just the rhetoric," he said. "We have a spending problem in this country."
Hoeven said the country dealt with a similar set of economic woes in the 1970s and 1980s, when "stagflation" crippled the nation's economic growth and contributed to growing deficits and debt.
But he said the federal government was able to transition from a deficit to a surplus by the end of the 1990s by controlling spending and establishing the right "pro-growth, good business" environment to boost jobs and investment.
Hoeven said he's willing to support tax reforms that "encourage growth and investment," leading to revenue increases without raising the overall tax rates. A tax hike would instead hamper private investment and slow job creation, he said.
But he said the country is spending too much -- $3.7 trillion annually despite $2.2 trillion in total revenues, amounting to a $1.5 trillion deficit this year -- and cuts to federal programs and services will have to be part of the solution.
"That means everybody has to share in terms of getting the budget back under control," he said. "It's like any task: if everyone works on it together, if we all share the effort together, we'll get there."
That includes services that North Dakota heavily relies on, such as agricultural subsidies, entitlement programs and other federal funding that residents and local governments have come to expect.
"If you talk to people in agriculture, they recognize the budget problem we have in total and agriculture will participate in finding some savings," he said. "It should be proportional to what everyone else does; we all have to participate, so agriculture will. We all lift the load together, and that's how we get the job done."
Berg said the nation needs to adopt spending caps and find a way of stabilizing its economic outlook to "restore confidence" and help get the economy going again. He said much of that work will require prioritizing and targeting funding for "critical" services, such as agriculture and disaster recovery.
Still, he said tough decisions will have to be made to get America out of this "upside down spending."
"I'm going to do what's right for North Dakota long-term, but I believe it's good for our country to be back on track," he said. "That helps North Dakota more than anything."
Conrad said many Washington lawmakers are under the impression that balancing the budget in the near future is "impossible to do," but he said that idea is "nonsense." He developed a plan that he said could reach that goal in 10 years with a 6 percent spending reduction and a 6 percent revenue increase.
"But I haven't been able to convince anybody to do it," he said, adding that it might not be much easier to find enough support in Congress to pass a plan that will fully deal with the nation's fiscal problems.
"Some of our colleagues are in denial; others just don't want to make tough choices. And this requires difficult choices."
Johnson is a reporter at the Grand Forks Herald, which is owned by Forum Communications Co.