The Gazette: Budget Before Borrowing Act would end spending madness
I propose a simple New Year’s resolution for Congress - pass a budget before borrowing any more money. Some may be shocked to learn that the Senate has not passed a budget in three years. Despite that, or perhaps because of that, Washington’s borrowing and spending continues out of control.
Earlier this month, President Obama sought the approval of Congress for yet another increase to the nation’s borrowing limit. This approval will ultimately be granted unless two-thirds of both the House and Senate object. I am absolutely voting against this increase.
If an individual or family or small business owner were to ask the bank for a loan without presenting a plan on how they would spend that money and pay it back, no bank would even consider such a loan.
But that is exactly what is going on with our federal government right now. President Obama has continually come to Congress to ask for increases to the nation’s borrowing power. Because of Senate inaction, the Treasury Department keeps borrowing more money without any kind of budget or written plan for spending it, much less paying it back.
The latest increase to the debt ceiling limit allows President Obama to borrow an additional $1.2 trillion, which brings our national debt to $16.4 trillion. And he will likely be back asking for another increase at the end of this year.
I have introduced a bill to stop this madness. The Budget Before Borrowing Act is a straightforward, no-gimmicks approach to spending money. It very simply says that the nation cannot raise the debt ceiling limit unless the House and the Senate have agreed to a budget resolution. This can only be waived with a vote of two-thirds of the Members in both Houses.
The premise is simple. To get our spending under control, we must actually set spending priorities and put a plan forward to reduce our national debt of $15.2 trillion. It is bad enough to borrow like there is no tomorrow. But to do so without even a budget in place is simply wrong.
In eighth-grade civics, you probably learned that the House and Senate each propose budgets for the coming year, and then they resolve the differences between the two spending plans in a third bill worked out by a conference committee. Since the Senate has failed to put forward a budget, or adopt the House’s budget, which we have indeed passed, the federal government continues to operate without a cohesive plan to address our fiscal issues. It has created tremendous uncertainty for the markets and may even be the reason one credit agency downgraded our credit.
We cannot continue to operate this way.
Consider the case of Greece. Just two years ago, their debt-to-gross domestic product (GDP) ratio was 101 percent.
Economists have found that when government debt-to-GDP ratio rises above 90 percent, it lowers the future potential GDP of that country by more than 1 percent. It also locks in a slow-growth, high-unemployment economy. Today Greece’s debt-to-GDP ratio is 183 percent.
Two years ago, the United States’ debt-to-GDP ratio was 88 percent. Today, we have crossed the tipping point that economists warn of, and we are at 101 percent.
Ultimately, it is the middle class that will suffer from overspending. Americans have been for too long feeling the pain of an economy that cannot create jobs. The economy simply cannot grow when our debt reaches these levels. Private investment capital is sucked up by the federal government. We become more dependent on nations like China. Servicing the debt consumes a bigger and bigger share of annual federal spending.
If we make spending reforms now, before we reach Greece-like crisis levels, I believe we can avoid much of this pain, grow our economy, and restore the American dream.
The choice is clear. We can adopt my Budget Before Borrowing Act, which forces Congress to pass a budget before borrowing any more money, or we can continue to borrow and spend without any restraints and turn into the next Greece.
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