By Troy Senik
If, as expected, a new generation of economic conservatives join the ranks of the United States Congress in the wake of the upcoming midterm elections, they will face a momentous challenge: how to finally deliver on the promises of fiscal restraint that have so often eluded recent Republican majorities.
To do so, they will need to understand how past congressional failures have set us on the road to reckless spending and how dire the consequences will be if we don’t change paths soon.
In 1995, Congress came within inches of passing a Balanced Budget Amendment.
In that moment, we stood on the precipice of long-term fiscal responsibility. But the amendment failed -- by one vote.
By 2020, the total gross federal debt, including liabilities for Social Security and Medicare,-- is anticipated to reach 122 percent of GDP. Even without factoring in entitlement obligations, this will translate to a debt burden of more than $170,000 for every American family.
Apart from being fiscally unsustainable, this is a formula for economic decay. A recent study by Harvard University and the National Bureau of Economic Research shows that when the U.S. carries a debt burden greater than 90 percent of GDP, average economic growth is negative two percent. In any set of circumstances, this would lead to stagnation. But in the midst of the current economic downturn, it is a national suicide pact.
If this trend continues unbroken, the United States will find itself poised for the same kind of decline that has beset nations like Greece and states like California. But there’s still a limited window left for us to stave off disaster.
Any serious approach to our economic travails will have to tackle three issues simultaneously: the need for balanced budgets, the danger of tax increases during a time of recession and the prevention of an expansion of the nation’s debt load. The current national consensus for common-sense budget reforms provides leaders in Washington the impetus and the opportunity to address all three.
What’s needed is a Constitutional Amendment requiring 60 percent of the Senate and House of Representatives to vote in the affirmative for any piece of legislation that increases the debt ceiling, raises current taxes or imposes new taxes. The Constitutional Amendment should also require Congress to pass a balanced federal budget annually.
By embracing balanced budgets, these common-sense reforms embrace the legacy of the original Balanced Budget Amendment campaign of the mid-1990s. But they also recognize that balancing the federal ledger is a necessary, but not sufficient, step to getting our fiscal house in order.
Too many pundits treat the national debt as our great economic malady, not realizing that it is a symptom rather than the cause of our current malaise. The fundamental problem is the size of government. Every federal expenditure—whether paid for in the present or the future—is extracted from the productive private economy. Requiring only a balanced budget leaves Congress room to make up the government’s shortfall through higher taxes. But weakening the private sector’s ability to generate value is a recipe for increased stagnation, not an economic recovery.
The message from legions of taxpayers is abundantly clear: The budget should be balanced, the debt should be reduced, and the Congress should accomplish these ends by ceasing its reckless spending instead of by increasing taxes to compensate for its lack of self-control.
Fifteen years ago we missed our opportunity, by just one vote, to keep the U.S. economy on a path that could support consistent growth and prosperity. If we fail this time, the opportunity to right our course may not present itself again.
It’s time for the American people to use their vote and their voice to deliver one more vote for reform in Washington.
Troy Senik, a former White House speech writer for President George W. Bush, is a Senior Fellow at the Center for Individual Freedom (CFIF), the organization leading the “One More Vote” initiative (www.OneMoreVote.org).