Living on Credit: the Federal Budget
Washington,
Jun 9 -
Both Republicans and Democrats are guilty of excessive and unwise deficit spending. However, the past mistakes of both parties are no excuse for continuing this dangerous practice. The largest federal deficit between 2001 and 2007 was $413 billion. This year’s deficit is projected to reach an unprecedented $1.8 trillion by the time the fiscal year ends in September. House Speaker Nancy Pelosi’s budget projects nearly trillion dollar deficits for each of the next five years.
Every deficit dollar must first be borrowed. Just like your mortgage or your credit card, interest must be paid on that debt. According to recent White House estimates, the U.S. government will have to borrow nearly fifty cents for every dollar it spends this year. In fact, Speaker Pelosi’s $3.6 trillion budget will cost taxpayers more than $1.6 trillion in interest payments alone over the next five years.
As of June 2, 2009, the total U.S. national debt was $11,382,737,715,925.23 (nearly eleven and a half trillion dollars). That amounts to $37,348 for every man woman and child in the entire country. The term ‘national debt’ refers to direct liabilities of the United States Government. More than half of the national debt (just over seven trillion dollars) is held by the public, meaning it is held by individuals, corporations, State or local governments, foreign governments, and other entities outside the United States Government. The rest is debt held by government accounts. According to the Treasury Department, China holds the largest amount of U.S. debt, nearly $800 billion in March 2009.
On May 14th, President Obama said, “We can’t keep on just borrowing from China. We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.” The President expressed valid concerns that holders of U.S. debt may tire of buying it, causing interest rates to rise and slowing our economic growth. Treasury Secretary Timothy Geithner was recently in China to reassure our largest financier that we are good for the money and to persuade them to keep financing our voracious spending.
Promoters of this spending spree, including the Speaker and the President, have argued it is necessary to save and create jobs. Sadly, since the $787 billion federal stimulus plan was enacted in February, an additional 1.6 million Americans have lost their jobs, despite promises that the stimulus package would create or save 3.5 million jobs. Unemployment in the United States has reached a twenty-five-year high of 9.2 percent according to the recently-released jobs report for May. In Kentucky, the unemployment rate is nearing ten percent.
Incredibly, Washington’s appetite for new spending still is not satisfied. When spending exceeds revenue, there are three choices: either generate more revenue (increase taxes), borrow more money or cut spending elsewhere. For decades, Washington has relied on tax increases or more borrowing. President Obama is right; change is needed in Washington. We need to cut spending and end the habit of living beyond our means.
At a time when virtually all Americans are tightening their budgets, Washington should show the same common-sense restraint.
