Uncle Sam is spending you into the poorhouse. Taxes, inflation, unemployment, interest rates – all could skyrocket if Washington keeps spending trillions of dollars it doesn’t have. Unless we begin to cut spending now (a lot of spending) these four horsemen of debt will ride roughshod over families and businesses already struggling to get by. Fortunately, we still have a chance to kick the spending addiction and keep the American Dream alive.
What Can’t Go on Forever, Won’t
Between 2007 and today, total federal spending rose by almost 36%. Meanwhile, taxpayers’ personal budgets have headed in the opposite direction. From 2007 to 2009 (the latest data available), median family income actually fell by 4.2%.
As a result, the federal deficit will top $1.6 trillion this year – fueling the increasingly rapid rise of our $14 trillion national debt. It should be obvious to all that today’s reckless spending cannot go on forever. But under the budget recently proposed by President Obama, the federal government never comes close to living within its means. In ten years, his plan sees the national debt almost doubling to $26 trillion. If the President’s economic predictions prove too rosy (as his stimulus predictions certainly did), the problem gets even worse.
Picture a family that earns $50,000 while spending $80,000 – every single year. Eventually, this family’s budget will get smaller. Just like Uncle Sam, the only question is whether they cut back now and on their own terms, or later, with far worse options and much more pain. People know it will take tough love to get the federal budget into balance. What they don’t yet know is whether their elected leaders will have the courage to deliver.
The Road Ahead
If Senate Democrats accept Americans’ call for lower spending, Congress will soon avoid a government shutdown and agree on funding levels for the last 7 months of this budget year. But bigger battles await. Sometime in the next few months, Washington will hit its legal limit for borrowing. And before October 1, 2011, Congress must write a budget for next year. Our response to these challenges will determine whether Uncle Sam devours our economy with debt or helps it grow by slimming down and getting out of the way.
The coming budget and debt ceiling debates represent the last real chance to cut spending and keep our economy competitive for the 21st Century. A starting point for discussion should be the Republican Study Committee’s plan to cut nearly $2.5 trillion of “discretionary spending” (the part of the budget that funds federal agencies) over the next ten years. Still, our Spending Reduction Act is just a head start in the race to save the economy from crippling debt. To get to the finish line, we’ll have to go farther.
The big budget challenges are in so-called “mandatory spending” or entitlement spending (which accounts for nearly 60% of the budget). Medicare, Medicaid, and Social Security were all created as a safety net for the most vulnerable in our society. Over the decades, however, expanded eligibility and benefits and longer life expectancy have stretched this net to its breaking point. Sadly, President Obama’s budget is completely silent on how to save these programs from their current path to bankruptcy. If the country does not act soon to reform and preserve this safety net, the people who need it most will suffer the consequences.
The Courage of Our Convictions
A few weeks ago, the House Appropriations Committee unveiled legislation to reduce spending for the remainder of the 2011 budget year. While we appreciated their good work, members of the Republican Study Committee also knew that more needed to be done. We sent the bill back to the drawing board, and as a result the House recently voted to cut total spending by more than $61 billion this year, or $100 billion below the President’s request. Now it goes to the Senate.
Although last week’s vote to cut spending was only the first step of many, it should have been a bigger step. To keep this country a land of opportunity and innovation, Representatives, Senators, and the President himself will need to work together make the large spending cuts necessary to get the budget on a path to balance. Nearly every politician talks about the dangers of unchecked deficits and debt. In 2011, Americans will learn who has the courage of their convictions.
As we see today in Wisconsin, the Left will fight vigorously to kick the can down the road one more time. At this moment, however, we stand at a fork in the road. Down one path wait higher taxes, rising inflation, painful interest rates, and fewer jobs. Down the other, the chance for individuals, families, and businesses to build a healthier, more prosperous future.
No choice could be easier to make.