Washington’s chronic overspending problem is becoming a national emergency.
Judging by the budget he submitted to Congress, President Obama is abrogating his responsibility to provide the principled leadership we badly need to solve the problem. Instead, Congress will have to provide the leadership that the president will not. There is no more time to kick this can down the road.
In only the last decade — since 2000 — total federal spending has doubled. Last year’s level reached 25 percent of our nation’s economy — a post-World War II record and far higher than recent years have averaged. This spending surge has resulted in massive, record-breaking deficits. As recently as 2007, our deficit was only 1.2 percent of our gross domestic product. This year it is more than 10 percent, or $1.6 trillion. Our government is borrowing about 40 cents of every dollar it spends.
The recent, huge deficits have, inevitably, created a mountain of debt. Over the last 20 years, our debt had remained fairly constant as a percentage of our national output. From 1988 through 2008, federal debt averaged 41 percent of GDP. Today it’s 64 percent. It’s going to be 72 percent of GDP by October.
By the end of 2011, the debt will have more than doubled in only four years. President Obama has proposed tripling it by 2017. And, this is just a fraction of the problem that we have.
These debt figures include neither the government’s contingent liabilities nor the unfunded commitments we have taken on. Federal guarantees of just Fannie Mae’s and Freddie Mac’s outstanding obligations total $5.4 trillion, according to the Government Accountability Office.
And the unfunded commitments of the big entitlement programs — Medicare, Social Security, and Medicaid — total well into the tens of trillions of dollars.
Economists who have studied the effects of excessive debt agree that it hinders economic growth and can lead to huge, sometimes repeated, financial crises. Many believe we are already experiencing the former and are on a collision course with the latter.
Yet the president just proposed another budget that continues deficit spending as usual.
Over the next 10 years, the president’s budget adds $7.9 trillion in new spending beyond his 2011 budget, $1.4 trillion in new tax increases, and still adds $8.5 trillion to our national debt. He proposes keeping the federal government bloated at nearly 24 percent of GDP and offers no reforms for the big entitlement programs driving our future deficits. And these deficits will likely be worse than the White House projects since its budget assumes stronger economic growth, lower interest rates, and lower inflation than many economists believe likely.
This irresponsible budget comes at a time when the country is only a few months away from hitting its statutory debt ceiling. Since ongoing tax revenue will fund only 60 percent of projected government spending, Congress would have to raise the debt limit to permit more borrowing and continue down the spending path we are on.
The president and his administration have demanded that Congress raise the debt ceiling, prior to reaching it, and with no conditions attached.
That would be a big mistake. An administration that gave us an $800 billion stimulus bill; a trillion-plus-dollar health-care bill; hundreds of millions in bailouts; and that even now advocates a $50 billion high-speed-rail boondoggle, cannot be relied upon to rein in spending on some indeterminate day in the future. We need to act now.
Congress should insist on real, immediate spending cuts and substantive reforms of our broken spending process as part of any debt-limit-increase package. The House has made a good start on the former with the bill it recently passed that funds the government for the rest of this year.
As for substantive, structural spending reforms, a balanced-budget amendment to the Constitution would be an ideal fiscal straitjacket. But I would be open to other reforms including tough, statutory spending caps that would limit total spending and force Congress to live within its means.
If a family spends beyond its means for years, charging all of its excess purchases to an array of credit cards, when the family maxes out on the cards most Americans would say it was time for them to reform and cut their spending — before they got another credit card!
It should be no different for our government. Too much debt inhibits job creation now and dangerously jeopardizes our financial, economic, and even national security future. Before we authorize more borrowing, Congress should enact the reforms needed to put us back on a sustainable fiscal path despite the president’s objections. Anything less would be irresponsible.
Pat Toomey is the junior U.S. senator from Pennsylvania. Contact him via http://toomey.senate.gov/contact_form.cfm.
- Pat Toomey makes the irrefutable case that the government is spending too much and that the obvious solution is to spend less.— bobguzzardi
- Sen. Toomey's article is well written but lacks specifics of how he would cut the major entitlement programs; Medicare, Medicaid, Social Security. The answers won't be easy, and months of negotiation and compromise lie ahead.
One enormous money-saver that both parties could come together on is our expensive immigration policy. Each year we allow in 1-1.5 million who want jobs and are keeping them away, often, from our own unemployed young people. Furthermore, they are on average of low skill whose taxes will not come close to paying for their health care, welfare and schooling of their children. About 600,000 come in through family chain migration, and work visas, 300-400,000 illegally, 50,000 by winning a lottery, 80,000 refugees from places like Somalia, 45,000 asylum seekers. As an example, it can cost $10,000 or more to fly in a refugee and get him provided with cash, food stamps, public housing and a half-dozen other benefits. Restriction of immigration to 100-200,000 per year of scientists, professionals and entrepreneurs of the highest level of accomplishment would save hundreds of $billions over the next 10 years, while at the same time strengthening America.— folfox - Barack Obama de facto president deserves every bit of derision he gets--he and his Marxist cronies are deliberately wreaking the economy and the USA!— BLADESKATER00
- Toomey references the proposed GOP cuts. That is the plan. Obama's budget increases spending on programs that are not even working in Philly -- look at HUD. Obama's budget increases rental vouchers for Philly and funding for PHA! PHA, people. Yes, the housing authority. In whose world is that sane? PHA even got stimulus funds from Obama. Obama has gone spend-mad and lost his mind. It's not helping the economy recover, it's ensuring that the recession will be extended for years and years. This is the math. Obama is spending like we are still in the boom years, and even more of a boom than we had. He wishes. Time to come back down to reality.— CleanupPhilly
- Toomey seems to think the deficit is Obama's fault and neglects to mention how the Republicans created it with tax cuts, mismanaged wars, and a recession. Doesn't mention that the budget was balanced when Bush took over. Toomey also neglects to mention any cuts in Obama's budget proposal, or his proposed $78 billion in cuts from the military. Tommey's editorial is nothing but a partisan hatchet job. The budget cuts he proposes will cost us 700,000 jobs. He's a joke.— mouthwash
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Pat, would a family in trouble financially from outrageous debt do what republicans essentially did, cut revenue (income) in the form of tac cuts?
the republican math never adds up.