FCNL's Letter to the Super Committee on Deficit and Debt Reduction

Aug 30, 2011

FCNL sent a version of this letter to all of the members of the supercommittee on deficit and debt reduction.

PDF Version.

August 29, 2011

Dear Senator Murray:

Congratulations on your appointment to the super committee on deficit and debt reduction. You have an opportunity to bring common sense, practical solutions, and sound economic principles into play as you identify ways to strengthen the nation’s economy and lower our relative national debt. The rancorous tone of the summer debates has been disappointing and counter-productive; you and your committee can change that.

The Friends Committee on National Legislation offers six elements that we believe should be part of the package you present to Congress. Together, these six elements would reach the results we all seek: a stronger economy, more jobs, more revenue, fairer taxes, more efficient and effective spending, and a continued commitment to the most vulnerable in our society.

Invest in direct job creation. The super-committee has an opportunity that, as a matter of practical politics, is simply not available to the rest of Congress – to invest in job creation. Increased employment is both a revenue raiser and a spending reducer, as more people are able to buy more products and services and contribute taxes, and fewer people need income and support services. Recent attention to job creation has focused on easing the tax burden of employers. But tax breaks alone will not create employment. Small business owners organized as the Main Street Alliance have emphasized that they need customers able to buy their products and services more than anything else.¹

Reduce military spending. Military spending has doubled in the last decade and makes up more than half of all discretionary spending. The Pentagon budget also has the distinction of known cost overruns, wasteful spending and un-auditable books. The bi-partisan Sustainable Defense Task Force has identified nearly a trillion dollars in military spending reductions that could be adopted over the next years without affecting the security of the U.S.²

End the wars and use the savings for deficit reduction. Both major parties now seem to agree that ending the wars in Afghanistan and Iraq will save about $1 trillion over the next decade, in addition to savings that should be realized from the “base” military budget.³ Shifting from intensive military expenditures and direct conflict to aid that builds civil society and community and economic development with international partners will cost far less in real dollars and in human lives.⁴

Reduce spending through the tax code (tax expenditures). “Entitlement” spending is carried out through the tax code as well as through statutory programs. Due in large part to special provisions in the tax code, the average effective tax rate for corporations is at an historic low of 15 percent. During the last three years, 12 of the largest and wealthiest corporations (including General Electric, DuPont, Boeing, Exxon, Verizon and Yahoo) paid an average tax of negative 1.5 percent on combined earnings of more than $171 billion. Closing tax loopholes, especially those that do not promote good public policy, is a fair and efficient way to raise revenues.⁵

Get a handle on health care spending. The Affordable Care Act, which is gradually going into effect, is projected to decrease the deficit by $210 billion over the next decade. Improvements to the system, such as removing for-profit insurance companies from the center of health care finance equations, would save even more.⁶

Protect and invest in the most vulnerable. Among middle income households, many lost everything – their jobs, their homes, their savings, their health care. But among the poorest, many became – and are – destitute. Thirty-five percent of African American households and thirty-one percent of Hispanic households had zero or negative income in 2009. Cutting the services and benefits for the poorest families and individuals is fundamentally unfair and unworthy of this nation. Failing to invest in housing, education and health care for the next generation of adults is short sighted for a country that needs to strengthen its future economy.⁷

We appreciate the hard work you will be doing with your committee, and we rely on you and your colleagues to apply your best thinking to our nation’s economic needs. We share the view that there is a sensible way forward and we applaud your willingness to dig in and find it.

Sincerely,

Diane Randall Executive Secretary