“The $16 trillion debt is the elephant in the room,” he said.
Graves said the federal government continues to spend more than it takes in and taxes can’t cover the whole difference.
“To me, this isn’t difficult to fix,” he said. “We need to cut spending.”
He said everyone’s proposals should be put on the table, regardless of political party, and be judged by a simple, four-part litmus test.
“Does it create private sector jobs; does it expand the economy; does it empower taxpayers or government; and is it constitutional,” he said.
Graves said the national media puts undue pressure on Congress when it slaps a label like “fiscal cliff” or “Countdown to the Shutdown” on negotiations — pressure that could force hasty decisions.
Still, he called the automatic triggers set to go off in January “disturbing,” and predicted a battle in the remaining weeks of 2012. He shared his take on the elements that, combined, could shake the U.S. economy.
“The president has decided he wants taxes to go up. He wants to punish success and expand government,” is how Graves framed the debate on whether to renew the Bush tax cuts on all income or just the first $250,000.
On the Budget Control Act of 2011 — the sequestered $1.2 trillion deficit reduction package split evenly between defense and nondefense spending — he said “it means we’re going to cut military to a point where this country could be at risk.”
The extension of unemployment benefits also is due to expire, but “I’m of the opinion the extension of unemployment benefits extends unemployment,” Graves said.
The final piece of the puzzle, he said, is the expiration of “the doc fix,” a temporary deferment of cuts to Medicare reimbursement set by a formula widely accepted as outdated.
Graves said addressing these issues before the end of the year will be a challenge, but Americans have gotten through tough challenges in the past and will get through this one.
“It’s in our DNA,” he said.
He reiterated he expects “a tremendous battle” over the Bush tax cuts during the next several weeks “but, quite frankly, a tax increase is the easy way out.” Spending cuts and revisions to some out-of-control programs are the key to long-term stability, he said.
“This can be fixed. It’s simple. We just have to do the right thing,” Graves said.