First, I want to applaud Chairman Spratt for choosing to begin this year’s budget season by focusing on our nation’s deficit and debt.
Now, many of us here have warned for years about the unsustainable trajectory of Federal spending growth – particularly that of our largest entitlements – and what it means for America’s economic and fiscal future.
For a long time, these warnings seemed to fall on deaf ears.
But there is reason to think that might be changing. Americans from all corners of our nation have become increasingly alarmed – and angered – by the explosion of spending, deficits, and debt they’ve seen come out of Washington. They’re right to be.
Consider: in a single year, this Congress has pushed through a trillion-dollar, debt-financed economic “stimulus”; a budget that would double the debt in five years and triple it in 10; and initiated the expansion of government control of the Nation’s energy sector, financial markets, and the auto industry.
But I think Americans are most alarmed by the seemingly relentless drive to jam through a new, trillion-dollar entitlement – and a government take over of our nation’s health care sector.
All told, the Congress and White House last year pushed through legislation that will boost spending by over 3 trillion over the next decade, raise taxes by nearly $1.3 trillion, and increase deficits and debt by $1.7 trillion.
As alarming as today’s $1.4 trillion deficit is, our nation’s long-term debt projections are almost inconceivably worse.
This past November, historian Niall Ferguson wrote in Newsweek that if we fail to come up soon with a credible plan to get our fiscal house in order, quote “the danger is very real that a debt crisis could lead to a major weakening of American power” end-quote. And he pointed to historical precedents in which great empires collapsed under their indebtedness.
We like to think this couldn’t happen to us. But then we never thought General Motors could go bankrupt; we certainly never imagined that he Chinese would be lecturing us about fiscal prudence.
But here we are.
We must set a different course: and I think that starts with recognizing a few basic points:
First, while it might be a great talking point for some, we didn’t get to this point because the Federal Government was being starved by American taxpayers. We’re here because Washington spends too much.
Even if this Congress lets all of the 2001 and 2003 tax relief laws expire, throws most onto the AMT, and resurrects the death tax – all it would accomplish is having imposed the largest tax hike in history – in the midst of a recession. Because – according to CBO – Federal spending would still far outpace revenue.
Second, the greatest factor in Washington’s spending problem is the unsustainable growth of our largest entitlements – specifically in Social Security, Medicare, and Medicaid.
And for every year we put off addressing it, the problem gets significantly worse.
We need real, substantive entitlement reform proposals. I’ve offered ideas of my own – others have too. But we need to move beyond the debate and get to the business of actually reforming these programs.
What I hope we hear today, from these very insightful witnesses, is what kind of fundamental entitlement reform they recommend to get this problem under control.