Federal Budget and the Economy

Sequestration and the Debt Limit

In August 2011, Congress and President Obama reached a compromise agreement to reduce the national debt by at least $2.2 trillion over the next 10 years. The agreement prevented America from defaulting on its debt, which a large number of Republican members of the House were threatening to allow if they did not get what they wanted. America has never defaulted on its debt and doing so would have been catastrophic to the economy.

Under the August agreement, nearly $1 trillion in spending would be cut from defense programs and from non-defense program and services, while the remaining $1.2 trillion in debt reduction would be determined by a so-called Super Committee, either through more cuts, new revenues, or a combination of the two. Failure of the Super Committee to agree on a solution would result in $1.2 trillion in additional automatic cuts to both defense and non-defense domestic spending beginning in January 2013. These automatic $1.2 trillion in cuts are referred to as “sequestration.”

At the time, George did not support the agreement to put the cuts into the hands of the so-called Super Committee. George understood that there was never a reason for the delay in raising the debt ceiling – this dangerous delay drove the United States all too close to default and even though it was avoided, the delay in resolving the conflict cost the taxpayers billions. He understands that the entire default crisis was politically manufactured by unyielding and extremist members of the Republican Party. George agrees that the debt needs to be reduced, but in this the debt ceiling was used to hold the economy hostage in an attempt to win unpopular and unfair spending cuts that would hurt the economy but leave the wealthiest Americans and corporations unaffected.

In the end, the Super Committee failed to agree on a balanced plan that would reduce spending and increase revenues, and now, like it or not, Congress is bound by its agreement to sequester the additional $1.2 trillion.

In the face of efforts by some of his colleagues to now exempt military spending from the automatic cuts, and place all of the burden on domestic non-defense spending like health care and education, George has said that either Congress must abide by its own vote to force the sequestration of spending from both accounts, or it should immediately begin bipartisan negotiations to replace sequestration with a balanced deficit reduction plan. He understands that sequestration is not in the country's best interest and is not the best way to assure responsible deficit reduction—instead, it simply leads to more economic uncertainty. Failure to reach an agreement would have devastating consequences for our economy, small business and the middle class.

The single biggest stumbling block to reaching a long-term debt reduction agreement has been the complete refusal by Republicans in Congress to agree to ask the wealthiest Americans and profitable corporations, like large oil and gas companies, to pay their fair share in taxes. Their refusal is the height of irresponsibility and obstructionism and is causing serious harm to our ability to grow the economy, create jobs, and protects the middle class. Read more about George’s efforts here.

The Housing Market

George returns to the East Bay from Washington nearly every weekend, and knows the toll that foreclosures and underwater mortgages have taken on East Bay neighborhoods. In California especially, it is clear that the economy will never fully recover until a plan is in place to bring relief to homeowners and to neighborhoods. That’s why George has been working aggressively in Congress to make it easier for homeowners to access the solutions that work for them — a refinance, a modification, a short sale, or whatever the case may be for that individual homeowner. He knows too well the horror stories that constituents face when they are up against the country’s largest banks and, as he has told President Obama, many constituents are being chewed up and tossed out by the largest banks. He continues to pressure both the Administration and the banks on behalf of his constituents.

George is also at the forefront of the fight with the Federal Housing Finance Agency, the agency that is standing in the way of efforts to keep underwater homeowners in their homes by reducing the balance outstanding on their mortgages. This is especially problematic in areas like the East Bay, where more than half the homes are underwater in many communities. Read more about George’s work with Rep. Zoe Lofgren.

In addition, George has regularly called top federal housing officials to Capitol Hill to meet with lawmakers, and written strongly worded letters to Administration officials urging them to do right on behalf of homeowners. George urges constituents that are facing foreclosure to call his Concord District Office for information and assistance.

PAYGO

George is a long-time supporter and original author of Pay-As-You-Go (PAYGO) budgeting. PAYGO prohibits Congress from increasing the deficit or decreasing a budget surplus to pay for new mandatory programs or tax cuts. PAYGO rules force the Congress and the President, whether Democratic or Republican, to make tough choices about our nation’s priorities and how we will afford them. Liberal and conservatives alike are have embraced this method of governing.

George introduced the idea of common-sense PAYGO budgeting in 1982, nearly 27 years ago. In 1983, George reintroduced a comprehensive PAYGO budget strategy that was approved by the House in April 1984.

In 1990, eight years after George’s bill was first introduced, a Democratically-controlled Congress and President George H.W. Bush enacted a legally binding pay-as-you-go budget plan. During President Clinton’s two terms, PAYGO budgeting is credited with reining in the record high Reagan budget deficits and achieving a budget surplus for the first time in a quarter century. But in 2002, under a Republican Congress and Republican President, the rules were allowed to expire. While in office, President George W. Bush turned a $5.6 trillion projected budget surplus he inherited into a $5.8 trillion projected budget shortfall – a staggering swing of $11.4 trillion.

In 2009, George and 168 Democrats introduced statuary PAYGO legislation. The bill passed the Senate as part of another bill and was signed into law by President Obama in February 2010.