Like most small business owners, I have called my banker to request a loan to cover payroll and other expenses. Inevitably, the two questions he wanted answered were: “How will you repay the loan?” and “What will you do to avoid this problem in the future?” On the afternoon of Oct. 16, Congress ended the two week government shutdown with the passage of the Reid-McConnell deal. The agreement borrowed more money and reopened the government but failed to answer either of these questions.
My rule is to only support necessary increases in the debt ceiling if spending cuts and reforms are part of the package. An example of this approach was the bipartisan agreement in 2011 known as the Budget Control Act, which set strict discretionary spending caps for a decade while increasing the debt ceiling. The result has been two straight years of real spending reductions for the first time since World War II. By contrast, the Reid-McConnell deal allowed for an immediate borrowing of an additional quarter trillion dollars with zero reforms.
The debt ceiling is an artificial, self-imposed limit on our nation’s ability to borrow money. Some of our friends on the other side of the aisle suggest we should abolish it entirely. I believe it is important to have such a limit to act as check on spending and encourage reforms. However, families, businesses, and governments hit their real debt ceiling when they borrow more money than they are capable of repaying. America is coming dangerously close to that situation.
Currently, debt is just over 100 percent of GDP. In other words, we have borrowed the equivalent of an entire year of economic output in the United States. This is an incredibly risky position for national security. If we were to face another global threat to freedom requiring a large scale military response, we would be forced to borrow previously unimaginable amounts of money, largely from foreign nations who may not have our best interests at heart. That is why former Chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, observed that the greatest threat to our national security is debt.
Too much debt also threatens essential government services. After all, every dollar dedicated to paying interest on borrowed money is a dollar that cannot be spent on Medicare or Social Security. In recent years, the effects of government borrowing have been mitigated by low interest rates. Should rates jump to historical averages or higher, we would face a crisis requiring immediate cuts in popular government programs, tax increases, or some combination of both. These events would increase the risk of triggering a prolonged recession.
Debt is also a drag on economic growth. Recent studies have shown countries with debt rising past 90 percent of GDP are consistently outperformed economically by more fiscally responsible nations. Debt is definitely a problem in the long term, but its immediate effects on the economy and job creation should not be overlooked.
Living so far beyond our means is also a moral failing. Forcing future generations to shoulder a burden they had no part in creating is the ultimate taxation without representation. Rather than irresponsibly piling debt onto our kids and grandkids, we should follow the example of the Greatest Generation. They borrowed huge sums of money to win World War II, but once the fight was over, they quickly paid down the war debt. The result was a legacy of freedom, strength, and wealth unlike the world has ever seen. It is our responsibility to pass that legacy on to the next generation.
Putting an end to Washington’s spending and debt addiction will require a level of political courage and leadership that has thus far been lacking from President Obama and the Democrats who control the Senate. They are totally committed to growing government, spending more money, and avoiding the hard choices we all know must be made. Given the balance of power in Washington, I understand why some people on my side of the aisle felt like they had no option but to support the Reid-McConnell agreement. However, the end result was exactly the type of business as usual I was sent here to stop, which is why I voted no.
U.S. Rep. Alan Nunnelee, R-Miss., represents the 1st Congressional District of Mississippi. Contact him at Tupelo District Office, 431 West Main Street, Suite 450, Tupelo, MS 38804 or call (662) 841-8808.