Domenici Sounding Debt Alarm

Former Sen. Pete Domenici retired from Congress in 2009, but as we’ve noted here before, he hasn’t retired from working on the nation’s fiscal problems.

For the past couple of years, the New Mexico Republican has been reporting to work at the increasingly influential Bipartisan Policy Center, a Washington think tank with the admirable goal of trying to encourage bipartisan solutions to the nation’s challenges.

For the past several weeks, Domenici has been up on Capitol Hill seeking an audience with just about any member of Congress who would listen. His message? Put your ideology aside and get to work on a compromise to raise the nation’s debt ceiling or watch America’s economic crisis just get worse. And yes, that includes some kind of tax increase, the Republican stalwart said.

“I’ve been disappointed to see many senators and representatives taking a position on this (debt-ceiling debate) as if it’s just a typical legislative item, and in some cases talking about it as if it didn’t really matter,” an exasperated-sounding Domenici said. “I have more than one time put my head on my desk and just thought ‘How can we do this to ourselves with high unemployment and so many other problems? How can we stab ourselves right in the heart?’ This should not be happening.”

The former Senate Budget Committee chairman said he suspects some Americans – and maybe even a few members of Congress – don’t understand the nature of the debate.

“This is not a debate about debt we’re going to accrue, it is about debt we already owe,” he explained.

Domenici told me last week that he isn’t touting specific policy prescriptions, but instead sounding alarms about what would happen if a deal isn’t reached. The Bipartisan Policy Center this month issued a sobering analysis of what would happen if the U.S. defaults on its creditors. That report is what Domenici has been showing lawmakers.

The study states that at the beginning of August, unless the debt ceiling is raised, the federal government will be unable to meet all of its spending obligations. After the Aug. 2 due date, federal spending would be reduced by as much as 44 percent for the remainder of August, as the Treasury prioritizes payments to remain under the debt limit.

Current revenue streams could pay interest on America’s existing debt, Medicare, Medicaid, Social Security, unemployment insurance and defense contracts, the Center found. After that, there would be no cash to pay the budgets of entire federal agencies, such as the Justice, Labor, Energy and Commerce departments. There would be no money to pay veterans’ benefits, IRS refunds, military active duty pay, federal salaries and benefits, special education programs, Pell Grants for college students or food and rent payments for the poor.

In short, it could ugly. Really ugly.

“It’s a matter of some disappointment that we find ourselves in this position as a nation,” Domenici said.

There appeared to be some significant movement toward a compromise on Capitol Hill on Friday, but a deal remained elusive. No one really expects Congress to let a default happen, but progress has been extremely hard to come by in recent weeks as leaders on both sides dug in their heels.

Domenici, who spent the better part of three decades as chairman or ranking member of Senate Budget Committee, knows a few things about the budget crisis. Some critics contend he contributed heartily to it, as he spearheaded billions in spending on the nation’s nuclear laboratories. Like virtually all Republicans, Domenici now favors slashing federal spending. But what about tax hikes?

Domenici said he isn’t enthusiastic about the Democratic proposal to raise taxes on families making more than $250,000 per year, but he said if he were in office he could vote to close some corporate tax loopholes in exchange for revising the corporate tax code.

“I would put taxes on the table and I would vote for some kind of revenues, but I would not let myself get drawn into trying to make this a rich versus poor situation,” Domenici said. “But I do believe there are revenues to be obtained by closing out loopholes.”

Whatever the mix, Domenici said Congress needs to reach a deal – and fast.

“We’ve got to put a plan together to compromise and get it right,” he said.

D.C. office

Immediately after her election, Gov. Susana Martinez told me she wasn’t sure if the state could afford to keep the Washington, D.C., office that former Gov. Bill Richardson opened when he was governor.

Well, according to Brian Moore – who arrived this week to take the job of the state’s Washington liaison – Martinez has decided she can’t afford not to fill the post.

“The challenge for New Mexico is a tremendous amount of our budget comes from here,” Moore, a former state legislator, told me during a phone interview last week. “The governor felt like she needed somebody out here to be her eyes and ears to be talking to the departments … about why we’re different than, say, Kentucky, and how we need to work together.”

Blogger Joe Monahan recently wrote about Moore’s new position, saying Moore left a top position on the fourth floor of the Roundhouse because he was unhappy with his job duties and clout in the Martinez administration. Moore said he has no problem with Martinez.

“The governor and I have a great relationship, and we remain old friends,” Moore said.

Moore agreed to take the state job for at least six months, but he said the assignment could be extended. He earns $115,000 per year.

Email: mcoleman@ABQjournal.com. Go to www.abqjournal.com/letters/new to submit a letter to the editor.