When I was Governor, Virginia was named the best managed state in America (tied with Utah and Washington).  We were Triple A bond rated by every ratings agency and the Pew Center on the States singled Virginia out for its exemplary management during recessionary times.  This wasn’t easy.  I had to cut more spending from the Virginia budget than anyone who has ever served as Governor.  But I did it the right way -- going line item by line item, starting with my own salary, to make cuts over the course of three years.

Some who preach fiscal responsibility have no idea how to do it.  They use stunts like threatening government shutdown, or defaulting on America’s obligations, or walking out on budget negotiations as a substitute for good faith dialogue and tough decision-making.  Often they push ideas that would shred our safety net for the vulnerable or damage the economy.  And, no surprise, many of the people who talk the talk about fiscal responsibility show by their actions that they are anything but fiscal conservatives.

The right strategy for America’s fiscal challenges is a balanced approach -- targeted cuts, tax reform and key investments to grow the economy.

Targeted cuts: We can find savings in all parts of government.  We shouldn't do it through across the board cuts because all programs are not of equal importance.  America's two biggest areas of expenditure are defense and health care.  We have to find savings in each area, but the priorities are important, so the cuts have to be carefully made. Our inventory of military bases around the world -- largely established during the Cold War -- should be reduced.  And new technologies -- from Predator drones to new, Virginia-built aircraft carriers that can be operated by fewer sailors -- will use American know-how to keep us safe and save money at the same time.  In health care, we cover nearly 28 million American seniors with a prescription drug benefit.  But the current law forbids us from negotiating for prescription drug prices!  This is an outrageous provision and if we could negotiate like any insurance company, we would save billions for the government and our seniors.

Tax reform: Reforming our tax code will involve a number of components.  We need to reduce the number of loopholes and giveaways. There is no reason why we should be giving tax subsidies to major oil companies -- particularly when they are making record profits.  And, the Bush tax cuts, made temporary specifically because of worries about the deficit, should be allowed to expire as planned for those making $500,000 a year or more.  More broadly, there is a serious need to look at the overall tax code and make it simpler and more transparent.

Investments: The best anti-deficit strategy is economic growth. Federal and state revenues reflect the finances of families, so when they struggle, government must cut back.  But when families and individuals are financially healthy, the result is increased revenue.  By ensuring that every able person has a fulfilling job that utilizes their skills and abilities, we will see an associated increase in revenue.  And as the recession ends and we return to more full employment, we will also see a decrease in the expenses that are required to respond to a recession -- unemployment insurance, increased Medicaid expenditures, and job training programs.  So we have to continue making the investments -- especially in infrastructure and education -- that will create jobs in the short term while building up a higher platform for long-term economic success.