(Photo by David Lias)
Sen. John Thune (R-SD) told a capacity crowd at the Vermillion Rotary Club Tuesday that cuts in federal spending, entitlement reform and changes in the tax code are needed to get the nation's fiscal house in order.
"It's time for us to make some hard decisions. They are going to be hard decisions because no one wants to talk about reforming some of these programs, but the fact of the matter is if we don't, these things are going to bankrupt the country," the senator said, speaking specifically of entitlements such as Medicare, Medicaid and Social Security that are contributing to an ever growing portion of the federal budget.
The noon luncheon meeting was held in the Al Neuharth Media Center on the University of South Dakota campus.
"We cannot continue on the trajectory we are on today and expect that younger generations of America are going to have Social Security and Medicare around for them," Thune said. "To save and protect these programs, we have to reform these programs."
He hinted that greater cooperation between Republicans and Democrats, and Congress and the White House is also needed. The tone of his remarks indicates he believes Democrats and President Barack Obama could have done more during the recent "fiscal cliff" negotiations, and will also need to do more as the nation's next bit of fiscal drama – the raising of the debt ceiling – is about to unfold.
"There have been periods in our nation's history when we've had divided government that have led to great accomplishments," Thune said. "There is obviously great conflict when you have divided government, and in 2010, voters elected Republicans to run the House, Democrats to run the Senate, and of course we had a Democratic president in the White House."
In 2012, voters decided to keep this composition of national leadership unchanged, he said. While not predicting whether the new session of Congress will be more productive than the one that took office in 2010, Thune cited hopeful examples.
"President Ronald Reagan, in 1983, worked with (Speaker of the House) Tip O'Neill to reform Social Security," the senator said. "Those reforms are still in place today … in 1986, President Ronald Reagan worked with Tip O'Neill and Democrats in Congress to reform the tax code. It was the first time that had happened in a generation."
Thune added that in 1996, a Republican Congress worked with a Democratic president – Bill Clinton – to reform welfare.
"My point simply is that divided government can be an opportunity as well as a challenge," he said. "It is a challenge because you have a lot of conflict, but it can also be an opportunity to do some really big things. It requires leadership on both sides."
Also key to reducing the nation's staggering deficit is a stronger economic recovery, Thune said.
"When people are working, people are investing, they are making more money, they are paying more taxes and government revenues go up," he said. "Getting growth back into our economy along the lines of more historic patterns, I think, is incredibly important."
A tax code with fewer loopholes and special interest provisions would be a step in the right direction, according to the senator.
"If we were to do something to simplify the tax code, to make it more fair, more clear and lower the rates," Thune said, "I think it would unleash a period of economic growth in this country unlike anything we've seen in a long time.
"I believe that not only should we be focused on the spending side and entitlement reform … we've got to be focused on tax reform because we are not currently competitive in the global economy," he said.
Thune noted that productive negotiations between members of both parties will be needed to enact these and other needed changes. He also said the greatest responsibility for the political system's future success or failure lies with President Obama.
"If we end up like we have with some of these big fights lately trying to negotiate things out – you do the give and take that's necessary to try and get a deal," he said. "I think the president is going to have to be at the table for that to happen.
"There is only one American among 307 million Americans who can sign a bill into law, and that's the president of the United States," Thune said. "We have one commander-in-chief, one individual, I think, who is capable of providing the leadership that is necessary to get things done. It's going to take that to get Congress – members on both sides – to work together. I hope the president will recognize what's at stake and really get himself into these discussions. It's going to take, obviously, some give and take on both sides."
The senator indicated that the necessary action that will soon be needed to on the nation's debt limit will be such an opportunity.
"Given the uncertainty that we just went through in December, and even given the great need for the fiscal reform that you just described, aren't we risking hurting the economy by tying these reforms to the debt ceiling increase?" Barry Vickrey asked.
"If you look historically at least in the last three decades, every major deficit reduction package has occurred around the debt ceiling increase,"' Thune replied. "There's a precedent we're dealing with here. In August 2011, the principle we operated on was for every dollar increase in the debt ceiling, they ought to get a dollar of spending reductions or government reforms that would score a savings in the budget to actually deal with the debt."
He told the Vermillion crowd that to get people to the negotiating table, "you have to have incentives. And there isn't a lot of incentive right now, in my view, with the president on the spending side unless there's something he wants.
"He's saying you can't hold the debt limit hostage to get government spending reforms, but if you don't do it there, you might be able to do it on a continuing resolution," Thune said, "but there's very little incentive then for the president to do anything serious on entitlement programs. I would hope that we not look at this as an obstacle but as an opportunity to try to do something really meaningful in the area of deficit reduction."