June 3, 2002
Congress Spends, Future Generations Pay the Bills
Congress recently passed the so-called "supplemental" spending bill, wasting billions of your tax dollars supplementing the already swollen $2.3 trillion 2003 federal budget. Congress loves the annual supplemental bill, because unlike other spending bills, the supplemental does not fund any particular federal departments or agencies. This means members and the administration can find a home for pet spending projects that would not be permitted in a defense or education bill. This year, however, the supplemental also provides convenient cover for the big-spenders to quietly increase the federal debt ceiling.
The problem is simple: Congress spends way too much. 2002 federal revenues are down compared to previous years, but Congress needs money to fund the post-September 11th spending spree. Faced with this pesky economic reality, Congress must do what any other organization does when spending exceeds income: borrow money. However, federal law sets a limit on the total amount of debt the Treasury can carry, and the limit- a whopping $5.95 trillion- has been reached. Since Congress apparently cannot control spending, the debt limit must be raised, this time by $700 billion. Yet no member, especially those who promote themselves as fiscal conservatives, wants to be on record as voting to increase the national debt.
The solution was to hide the debt limit increase as a single provision in a huge appropriations bill. Members can defend their vote for the supplemental based on their support for other measures in the bill, many of which were falsely cloaked in patriotic rhetoric More importantly, members avoided a naked up-or-down vote on the debt limit alone.
This new debt directly threatens your Social Security retirement dollars. Americans are starting to learn that there is no Social Security trust fund, that Social Security tax revenues are spent immediately to pay benefits to current retirees. This means the Treasury holds nothing but IOUs promising to pay your benefits when you retire. These IOUs are debts owed to the American people, and the more the federal government borrows, the greater the chance it will default on those debts. In other words, if the government borrows too much, it may not have enough revenues in the future to both pay Social Security benefits and service its other debts. If you are depending on Social Security to fund or supplement your retirement years, you should be very concerned about any increase in the national debt.
Some Washington pundits, including many supply-side economists, claim that federal debt really does not matter. These pundits want government to use debt as a financial tool, much like a large business might. They argue that the only real issue is whether the debt can be serviced. This argument ignores a critical distinction, however: expansion is a proper goal for business, but not for government. Businesses service debt by increasing their revenues in the legitimate private economy, while government can service increasing debt only by increasing taxes or printing more money.
Of course debt and credit, wisely used, can be proper tools for families and businesses. Yet when government borrows money, the actual borrowers- big spending administrations and members of Congress- never have to pay the bills. Instead, they enjoy the political benefits of delivering endless unconstitutional pork programs to their constituents and special interests, while future generations of taxpayers are stuck with the bill. It is time for voters to think about their grandchildren and stop rewarding spendthrift politicians with 97% reelection rates. Debt does matter, and itís cowardly to ask future generations to pay for our extravagance.