As the ranking member on the House Financial Services Subcommittee on Domestic Monetary Policy and Technology, let me simply state the hard truth.
To avoid the fiscal cliff and to get our budget deficit and the national debt under control, we need to do three things simultaneously: cut spending, increase revenue and have the courage to put everything on the table in a responsible, bipartisan manner.
If we fail to act decisively this time or just punt again to next year, the damage to our still-recovering economy could be massive, and the unanticipated negative consequences could prove catastrophic.
In a just-issued post-election report, the Congressional Budget Office warned that if we fail to forge an agreement, the economy would fall into a serious recession and unemployment would jump from the current 7.9 percent to 9.1 percent by the end of 2013.
All of the economic progress we have made during the past 31 months could be wiped out in a matter of weeks.
The CBO report also sounded the alarm about a grave danger to an estimated 41 million middle-class families who would be seriously harmed if Congress does not provide a patch for the alternative minimum tax as part of this agreement.
The Simpson-Bowles commission laid out a road map containing some common-sense parameters to guide us toward a realistic compromise that can actually become law.
The Simpson-Bowles framework suggests that, at a minimum, the government needs to adopt a $4 trillion fiscal stabilization program over the next 10 to 12 years.
That plan would cut domestic spending, trim military expenditures, close tax loopholes and find structural savings in Medicare and Medicaid.
Last year, President Barack Obama and our Democratic leadership proposed a 3-to-1 formula that would cut $3 in federal spending for every $1 in increased revenue.
We are even willing to discuss significant savings in Medicare and Medicaid, as long as essential benefits for seniors and the most vulnerable are preserved.
Some spending reduction proposals should be easy to agree on:
• Ending subsidies to big oil companies that are reaping record profits would raise $40 billion over the next decade.
• Changing an IRS tax rule that applies mostly to oil companies would generate $72 billion.
• Forcing hedge fund managers to pay their fair share of income taxes would raise $20 billion.
• Eliminating tax credits for ethanol and ending unneeded agricultural subsidies would save $116 billion.
• Selling off unused or under-utilized federal buildings would save $24 billion.
I am also committed to fundamentally reforming and simplifying the tax code.
Last year, Democrats proposed limiting the total value of deductions for taxpayers who earn more than $500,000 per year.
That single change in the tax code would bring in $100 billion in new revenue over the next 10 years.
But cuts to domestic spending and tax reform will not be enough.
The Defense Department must put its cards on the table, too.
During the past 11 years, the United States has spent more than $1.3 trillion in Iraq and Afghanistan for two wars that were charged on the national credit card with no provision to pay for them.
Thankfully, the president ended the war in Iraq and we are drawing down in Afghanistan.
If properly redirected, the peace dividend achieved from ending these conflicts could have a major effect on deficit reduction.
But these savings are just the tip of the iceberg in cutting the fat at the Pentagon.
• Eliminating the purchase of obsolete spare parts for all branches of the military would save $369 billion over the next decade.
• Fully implementing the reforms recommended by the bipartisan defense acquisition panel would save $270 billion.
• Realigning our nuclear arsenal to meet 21st-century threats would save $113 billion.
The American people expect Democrats and Republicans to leave behind the overheated partisan rhetoric from both sides that has often produced congressional gridlock.
I know that we can do this because the alternative of letting the country go over the fiscal cliff is unthinkable.
My Republican friends and I approach major policy questions from very different perspectives, but we share a common love for this country and a mutual responsibility to act like adults and carry out the people’s business.
After all, that’s why the voters hired us to do this job.
Rep. William Lacy Clay, D-Mo., is a member of the Financial Services and Oversight and Government Reform committees.