Letter to the Editor: U.S. Senate Candidate Tim Kaine

The action of S&P downgrading America's credit rating was disappointing but predictable. The agency warned against the impact of political brinksmanship. And, once some in Congress decided to use the economy as political leverage, the agency warned that only a grand bargain — a balanced approach of spending cuts and new revenues — would guarantee America retained its credit rating.

But, Congress — particularly the House of Representatives — ignored those warnings and backed away from the opportunity to embrace a balanced solution. And, as S&P specified, the continuing resistance of Congressional Republicans to entertain new revenue as part of a solution is a critical part of the downgrade decision.

The blame rests squarely on Washington’s shoulders, but all Americans will pay the price. Increased vulnerability from credit rating uncertainty could result in higher interest payments. American families and small businesses could be forced to pay more out their own pocket for every dollar they borrow. And, thanks to the connection between Virginia and Washington’s economies, we are more susceptible to a downgrade as a result of Washington’s intransigence than many other states.  

As a local and state government official, I am familiar with the consequences of downgrade. When I was elected to Richmond City Council in 1994, my predecessor council had taken irresponsible spending steps leading to a downgrade. We worked every day for over seven years to regain confidence and win back our strong credit rating. When I became Lieutenant Governor, Virginia's credit rating was listed with a negative outlook due to budget stalemate in the legislature and irresponsible tax policies.  

I worked with Governor Warner to find a balanced package of spending cuts and targeted tax increases to protect Virginia's fiscal reputation and keep our economy strong. As Governor, I made billions in budget cuts, while not hesitating to seek new revenue for job-creating investments in transportation infrastructure and education.

The important thing now is to take the right steps to improve our fiscal position and bolster the economy. The right strategy has three components — spending reductions, tax reform and investments to grow the economy.

In spending, we have to find targeted savings in all areas. As Governor, I examined all functional areas of state government and made cuts everywhere. Reform to entitlement programs — especially Medicaid and Medicare — has to be part of the package. There is no reason why the Medicare program should not be able to negotiate prescription drug prices for the 47 million people who are covered by the Part D drug benefit.

Tax reform must accompany this solution.  The unwillingness of many Republicans to consider revenue increases is the chief hold up to a solution. Closing loopholes may even allow for a reduction of marginal rates in a way that will encourage investment. 

And, we have to be honest about the Bush tax cuts. When passed in 2001 and 2003, they were made temporary for one reason--there was no way to make them permanent without ballooning the deficit. We must let those tax cuts expire as planned for the wealthiest Americans. This will promote a sense of shared responsibility because targeted spending cuts are likely to affect middle and lower-income Americans more directly.

Finally, we have to keep investing to grow the economy. You cannot just cut your way to prosperity.  Smart investments in innovation, research and education have produced strong results in Virginia and the nation. We must continue that approach. In Virginia, we invested in all levels of education — from expanding pre-K programs for low-income and middle class families to passing the largest bond package for higher education institution construction in Virginia's history. In addition, the nation must commit to major infrastructure improvements over the next decades to create jobs now and raise the platform for long-term economic success. These investments have a price, but the costs of inaction are much higher.

America can fix our economy, but we have to have leadership that is capable of making tough, informed decisions. The last months have revealed a disappointing parade of Congressional leaders who either don't understand the economy or are so wrapped up in partisan intrigue that they ignore the needs of the nation. 

However, I do believe there are those in Washington who share my commitment to civil discourse, bipartisan compromise and a balanced approach. It's time we let them take the lead in negotiating — not just to re-instill confidence among the credit rating agencies and the world, but also among our own citizens.  We can do better and we must.