Fiscal Discipline DADartmouth 2012
Fiscal Discipline DA
**NEG**
1NC Downgrade Shell
***Uniqueness***
Fiscal Discipline High
AT: Infrastructure Spending Now
Economy High
***Links***
Link – Generic
General Link Multipliers
Link – Airports
Link – Bering Strait
Link – Bike Lanes
Link – Dredging
Link – Ferries
Link – HSR
Link – Public/Private
Link – Shipping
Link – State Grants
Link – Subways
***Downgrade ILs***
Spending = Downgrade
2nd Downgrade Key
Downgrade Kills the Economy
***Other Spending Bad ***
Spending Bad – General
Spending Bad – Crowdout
Spending Bad – Confidence
Spending Bad - Investment
Spending Bad – Interest Rates
Spending Bad – Mismanagement
AT: Spending Good/Stimulus
AT: Stimulus
AT: New Deal Proves
AT: Austerity Bad
AT: Jobs
AT: Tax Hikes Solve
**AFF**
Fiscal Discipline Low
Economy Low
Downgrade Now
Stimulus True
Spending Good – General
Spending Good – Jobs
Spending Good – Infrastructure Specific
Austerity Bad – European Example
AT: Confidence
AT: Unsustainable
AT: Downgrade
AT: Crowdout
AT: Fiscal Cliff
**NEG**
1NC Downgrade Shell
A. Fiscal discipline now – political pressure will lead to debt compromise
Washington Post 7/18
Washington Post 7/18/12,
WASHINGTON — Acoalition of business leaders, budget experts and former politicians launched a $25 million campaign yesterday to build political support for a far-reaching plan to raise taxes, cut popular retirement programs and tame the national debt. With anxiety rising over a major budget mess looming in January, the campaign — dubbed "Fix the Debt" — is founded on the notion that the moment is finally at hand when policymakers will be forced to compromise on an ambitious debt-reduction strategy.After nearly three years of bipartisan negotiations, the broad outlines of that strategy are clear, the group's leaders said during a news conference at the National Press Club: Raise more money through a simplified tax code and spend less on Social Security, Medicare and Medicaid, the primary drivers of future borrowing."Everyone knows in their hearts and their minds what has to be done," said Democratic former Pennsylvania Gov. Ed Rendell, who is chairing the group with former New Hampshire Sen. Judd Gregg, a Republican. The goal of the campaign is to "create a safe environment where it's not only good policy, but good politics as well."The campaign was founded by former Clinton White House Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson of Wyoming. The two men led an independent fiscal commission that in 2010 produced a $4 trillion debt-reduction framework that has won praise from politicians across the political spectrum.But the Bowles-Simpson plan never won the explicit backing of President Barack Obama or GOP leaders and therefore never gained real traction in Congress.The campaign plans to launch a social media drive to persuade lawmakers to approve a plan similar to the Bowles-Simpson framework by July 4, 2013 — replacing $600 billion in abrupt tax hikes and sharp spending cuts that are otherwise set to take effect in January.
B. New infrastructure spending kills fiscal discipline – it undercuts the spirit of “shared sacrifice”
O’Hanlon 10
Michael O’Hanlon, senior fellow at the Brookings Institution, 12/22/10, “THE DEFENSE BUDGET AND AMERICAN POWER,”
So the minute that someone says, well, defense is the top constitutional obligation of the federal government and therefore it should be protected regardless, and we should make our deficit reduction out of other accounts. If we start a conversation in those terms, then a big constituency is going to come up and say let's protect Social Security, or let's protect college loans for students because that's our future after all. Or let's protect science research or infrastructural development, and you get the idea pretty soon you've lost the spirit of shared sacrifice that I think is essential if we're going to have any hope of reducing the deficit in the coming years. So that's the basic motivation. We're not probably going to reduce the deficit effectively, and therefore strengthen our long-term economy and the foundation for our long-term military power, if we don't establish a spirit of shared sacrifice.
C. Loss of fiscal discipline causes a downgrade
Mark Gongloff, Wall Street Journal, 08/2/’11, [Moody’s Affirms US AAA Rating, VN
Moody’s just came out and said, great job, USA, you get to keep your AAA rating. For now. This follows Fitch, which earlier said more or less that they were still reviewing the US rating, a process that could take through August. They didn’t promise they’d keep a AAA rating at the end of the process, but called the debt deal “a step in the right direction.” Now the big shoe dangling is S&P, which is really on the hook, having sounded the loudest warning about a downgrade. The size of the debt deal doesn’t seem to hit the $4 trillion mark S&P has said would be necessary to keep a AAA rating. My prediction? They’ll issue a similar placeholder statement soonish. Meanwhile, let’s hear what Moody’s has to say: Moody’s Investors Service has confirmed the Aaa government bond rating of the United States following the raising of the statutory debt limit on August 2. The rating outlook is now negative. Moody’s placed the rating on review for possible downgrade on July 13 due to the small but rising probability of a default on the government’s debt obligations because of a failure to increase the debt limit. The initial increase of the debt limit by $900 billion and the commitment to raise it by a further $1.2-1.5 trillion by yearend have virtually eliminated the risk of such a default, prompting the confirmation of the rating at Aaa. In confirming the Aaa rating, Moody’s also recognized that today’s agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the US government debt metrics withinAaa parameters over the long run. The legislation calls for $917 billion in specific spending cuts over the next decade and established a congressional committee charged with making recommendations for achieving a further $1.5 trillion in deficit reduction over the same time period. In the absence of the committee reaching an agreement, automatic spending cuts of $1.2 trillion would become effective. In assigning a negative outlook to the rating, Moody’s indicated, however, that there would be a risk of downgrade if (1) there is a weakening in fiscal discipline in the coming year; (2) further fiscal consolidation measures are not adopted in 2013; (3) the economic outlook deteriorates significantly; or (4) there is an appreciable rise in the US government’s funding costs over and above what is currently expected.
1NC Downgrade Shell
D. Further downgrades would create a debt spiral, crippling the economy
Rowley 12 Charles Rowley, Professor Emeritus of Economics at George Mason University, 10/15/12, “Renewed threats to U.S. credit rating,” Charles Rowley’s blog,
If Moody’s downgrades and if S & P further downgrades U.S. credit ratings, this would move the United States out of the exclusive club of AAA-rated nations, and throw into question the privileged status of U.S. Treasury securities as a safe haven for global investors. Any significant flight from Treasuries would raise Treasury bond rates, with crippling consequences for the economy. A 1-percentage point increase in rates would raise Treasury debt payments by $1 trillion over the next decade, wiping out the benefits of all the budget cuts enacted by Congress last year. The dynamics of such a process may prove to be devastating, moving the U.S. federal government onto a path of sovereign downgrades that accelerates an already worsening fiscal situation. Greece here we come.
E. Economic collapse causes global nuclear war.
Merlini, Senior Fellow – Brookings, 11
[CesareMerlini, nonresident senior fellow at the Center on the United States and Europe and chairman of the Board of Trustees of the Italian Institute for International Affairs (IAI) in Rome. He served as IAI president from 1979 to 2001. Until 2009, he also occupied the position of executive vice chairman of the Council for the United States and Italy, which he co-founded in 1983. His areas of expertise include transatlantic relations, European integration and nuclear non-proliferation, with particular focus on nuclear science and technology.A Post-Secular World? DOI: 10.1080/00396338.2011.571015 Article Requests: Order Reprints : Request Permissions Published in: journal Survival, Volume 53, Issue 2 April 2011 , pages 117 - 130 Publication Frequency: 6 issues per year Download PDF Download PDF (~357 KB) View Related Articles To cite this Article: Merlini, Cesare 'A Post-Secular World?', Survival, 53:2, 117 – 130]
Two neatly opposed scenarios for the future of the world order illustrate the range of possibilities, albeit at the risk of oversimplification. The first scenario entails the premature crumbling of the post-Westphalian system. One or more of the acute tensions apparent today evolves into an open and traditional conflict between states, perhaps eveninvolving the use ofnuclear weapons.The crisis might be triggered by a collapse of the global economic and financial system, the vulnerability of which we have just experienced, and the prospect of a second Great Depression, with consequences for peaceand democracysimilar to those of the first. Whatever the trigger, the unlimited exercise of national sovereignty, exclusive self-interest and rejection of outside interference would likely be amplified, emptying, perhaps entirely, the half-full glass of multilateralism, including the UN and the European Union. Many of the more likely conflicts, such as between Israel and Iran or India and Pakistan, have potential religious dimensions. Short of war, tensions such as those related to immigration might become unbearable. Familiar issues of creed and identity could be exacerbated. One way or another, the secular rational approach would be sidestepped by a return to theocratic absolutes, competing or converging with secular absolutes such as unbridled nationalism.
***Uniqueness***
Fiscal Discipline High
Fiscal discipline and consumer confidence now
Mike Dorning, John Detrixheand Ian Katz, Bloomberg Press, 07/16/’12, [Downgrade Anniversary Shows Investors Gained Buying U.S., VN
Warren Buffett, the billionaire investor renowned for his focus on company fundamentals, turned out to be prescient in shrugging off the downgrade: “In Omaha, the U.S. is still triple-A,” Buffett said amid the uproar. “In fact, if there were a quadruple-A rating, I’d give the U.S. that.” Photo: Andrew Harrer/Bloomberg Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened.“The U.S. Treasury is still the widest, deepest and most actively traded in the world,” said Jeffrey Caughron, a partner at Baker Group LP in Oklahoma City, which advises community banks on investments of more than $40 billion. “That becomes all the more important when you have signs of weakening global economic growth and continued problems in Europe.” Even in a slow recovery, the U.S. has unparalleled assets in the global market, including the size and resilience of its economy and the dollar’s standing as the world’s reserve currency. Low Treasury yields show that most investors think the U.S. government will meet its obligations, no matter how dysfunctional the political climate becomes in Washington.
Fiscal discipline now
CRFB, Committee for a Responsible Federal Budget, 05/25/’12, [GOOD NEWS ON THE FISCAL CLIFF?, VN
Each day the Fiscal Cliff gets closer and closer, adding more uncertainty to our economic situation. But, as Deutsche Borse Group reports today, there is some cause for hope. With the Congressional Budget Office (CBO) having released a report giving lawmakers an estimate as to what would happen if the all the policies scheduled to happen at year end would occur, there is news that there has been ongoing discussions and negotiations behind the scenes to get the job done - and better yet, to do so by enacting a full, comprehensive fiscal plan.To recap, the fiscal cliff is the expiration of a slew of policies, and the sequestration being activated, with the added bonus of needing to raise the debt ceiling. These policies combined, according to CBO would put the US economy into a double-dip recession for the first half of next year by having growth equal to negative 1.3 percent, but over the full year, would equal a still lackluster 0.5 percent. As we have explained previously, and as CRFB president Maya MacGuineas recently explained, "Instead of going over the fiscal cliff or allowing an ever growing mountain of debt, we should rise to the challenge and enact a comprehensive plan with more targetedand thoughtfully crafted measures."
Discipline now
MNI, Dutch Borse Group (Finance), 05/25/’12, [US BudgetWatch: Hill Braces For End-of-Yr Fiscal Cliff Battle, VN
"Things are pretty quiet on the surface up here (in Congress), but beneath the surface there is a lot of careful, detailed and intense working occurring on a deficit reduction package, involving people from both parties," Conrad said. Conrad said meetings to assemble, draft, and score a major deficit reduction package are underway, adding that he would like to move forward with the package "as soon as possible. But he added that it's not very likely that such a package could move in Congress before the election. "I think we all know the kind of plan we need to pass and pass very soon. But I can't tell you that there is sufficient support up here to pass it now. The mood must change. But things do change. Events happen. The situation in Europe worsens. We want to be ready if there is an opportunity," Conrad said. Conrad said he is working with lawmakers both within the Senate Budget Committee and in informal groups such as the "Gang of Six" to develop a deficit reduction package. "This is incredibly detailed, difficult work. It takes months and months of careful preparation to be ready with a plan. Some of us are determined to be ready pretty soon with a plan. We hope the political moment comes that allows us to move the package," he said. .
Fiscal Discipline High
Congress will make a budget deal to avoid the fiscal cliff now
Leon Panetta, Secretary of Defense, 06/02/’12, [Department of Defense Transcript:, VN
It’s been set because of the failure of the Super Committee sequester is now supposed to take effect in January. Both Republicans and Democrats recognize that that would be a disaster. Sequester would impose another $500 billion in defense cuts if it we were to go into effect. I know of no Republican, no Democrat who believes that should happen. Having said that, obviously, they have the responsibility then to take action now to de-trigger sequester from taking effect. I believe that they will work to do that. I really do, because I think there isn’t anyone that wants that to happen, so I’m confident that ultimately Republicans and Democrats will find a way to de-trigger that artificial crisis that they put in place. The third point is with regards to the confidence level I have that ultimately Republicans and Democrats will deal with the larger issues that we confront in our economy, particularly with regards to the deficit. In my history in the Congress, I participated in every budget – major budget summit beginning with Reagan, President Reagan, continuing with President Bush. As OMB director for President Clinton developed the budget, the deficit reduction plan that President Clinton put in place. In every one of those – every one of those – it was important for Republicans and Democrats to put everything on the table and to look at every area of spending, not just defense, not just domestic spending, but at entitlements and at revenues. And it was because we put all of those elements together in those packages that we ultimately were able to balance the budget. I know the politics of this is difficult both for Republicans and Democrats, but I ultimately believe that because it is so important to our country and to our economy that ultimately they will find the courage that is required here to be able to develop that kind of approach to deficit reduction.
No sequester – budget proposal
MiekeEoyang & Matt Bennett (Director of Third Way’s National Security Program, Vice President of Public Affairs and Co-Founder of Third Way, Politico, 7/12, Sequester hovers like a guillotine)
The president proposed a budget in February that, taken as a whole, would result in enough savings to avoid sequestration. He has now instructed the DOD not to bother planning for sequestration cuts — noting that they would be damaging and expecting that Congress will reach a real budget deal.