National Debt Matters in a Big Way
If we don’t get our fiscal house in order soon, we’ll pay for it much longer.
March 25, 2014 -
By: Rep. Jeb Hensarling
A recent newspaper headline caught my attention: “Debts, Deficits — Once a Focus [in Washington] — Fade From Agenda.” My immediate reaction was “not if I can help it.” So today, the House Financial Services Committee, which I chair, begins a series of hearings focused on why the national debt really does matter and why it matters right now.
For something to matter, it must first be understood. Billions and trillions of dollars are difficult to comprehend — so let’s consider the federal budget as if it were a family budget.
Say a family in Mesquite earned $27,740 last year but spent $34,540. With the $6,800 in new debt they just added, they now have $174,632 in outstanding credit card debt. To make matters ridiculously worse, the family has contracted to spend $994,000 in coming years with absolutely no way to pay for it.
Add eight zeroes to these figures, throw in a government printing press for money, and you have a good picture of our national “family” budget — unsustainable and headed toward a crisis.
We don’t have to wait for the inevitable crisis — like we see in Detroit and Greece — to know how our unsustainable debt hurts us today. Just look at our lackluster economy. When asked what one thing he would tell President Barack Obama is needed to foster economic growth, Honeywell chairman and CEO Dave Cote said, “I would tell him to resolve our long-term debt issue.”
Small-business owners feel likewise. As one of them told me, “Jeb, I know somehow, someway, I’m going to have to pay for all this debt. So now is not the time I’m going to take the risk of buying new equipment or hiring a bunch of folks.” The national debt is keeping people unemployed and underemployed.
Today’s debt also threatens our ability to conduct foreign policy and defend our homeland. As former Secretary of Defense Robert Gates said, “At some point, financial insolvency at home will turn into strategic insolvency abroad.” Mike Mullen, the retired admiral who served as chairman of the Joint Chiefs of Staff, put a finer point on it when he said “the single biggest threat to our national security is our debt.”
Indeed, our debt is helping drive the administration’s current troop reductions that will lead to the smallest Navy since World War I, smallest Army since World War II and smallest Air Force ever. One wonders what impact this has on Russia’s actions today.
It is estimated we will spend $233 billion this year on interest payments alone. That $233 billion is more than seven times — over 650 percent — larger than the requested annual budget for the National Institutes of Health. Think of all the childhood cancer studies going unfunded today because of our national debt.
Regrettably, the situation will get worse. When the Federal Reserve removes its thumb from the scale — as it will eventually have to do — the CBO projects as much as $630 billion a year over the next 10 years could be added to interest on the debt.
As interest rates rise, it’s not just the federal budget that will be squeezed; it will be the family budget as well. Any taxes raised on working families to pay for the additional interest on the debt will amount to an effective pay cut. Those shrinking paychecks will shrink even more as federal borrowing crowds out private borrowing on everything from car loans to mortgages.
Debt matters — and we can’t keep waiting for the next election or next generation to tackle it. To quote a Kenny Chesney song, “Everybody wants to go to heaven … but nobody wants to go now.” If we don’t “go now,” it’s not just our children, but many of us who will soon live in smaller homes, compete for fewer jobs with shrinking paychecks, live in a less secure America, and be limited to small, timid dreams.
This is America. We can and we must do better.