Americans likely have heard the terms "debt limit" or "debt ceiling" more in recent months than ever before. But what exactly does it mean? And why should we be concerned about it?
Because the federal government spends more than it takes in, it has to borrow money, creating a debt. How much debt it can incur is set by law, which currently limits it to $14.3 trillion. That's right: trillion, as in 143 followed by 11 zeroes.
The Treasury Department recently issued its annual report on the public debt. It projected that the gross national debt will exceed the size of our economy by the end of the year, three years earlier than projected in the same report last year.
It is clear that kicking the can down the road is no longer a viable option. We must act now. Why?
The U.S. government is borrowing more than 42 cents on every dollar it spends. Almost half (47 percent) of our public debt is owned by foreign sources, with China the leader at 29.2 percent of our debt, followed by Japan and the United Kingdom.
Since 1946, spending has averaged 19.7 percent of the economy. Projections now show that figure growing to 80 percent or more.
The U.S. House of Representatives recently considered legislation (HR 1954) to raise the debt limit by $2.4 trillion to $16.7 trillion without any accompanying effort to reduce spending. I joined the overwhelming majority of my colleagues in voting it down, as the bill failed with 97 yes votes to 318 no votes.
We must tie any increase in the debt limit to budgetary controls and significant cuts. If we ignore the reasons we need to increase our debt – too much spending – we will never be able to get our annual deficits under control. Our nation's current debt amounts to a $45,500 "birth tax" for every child born in America this year.
It is certainly true that there is waste, fraud, abuse and duplication in the federal government. But those problems are mere drops in the bucket compared to the major forces of our debt crisis, what could be called "autopilot spending" – the nation's retirement and health security programs, plus our debt payments.
Democrats for decades have tried to scare Americans into believing that reforming Social Security and Medicare puts their benefits in jeopardy. The truth – according to those programs' own leaders, the Social Security and Medicare Trustees – is that if nothing is done, Social Security benefits will be cut by more than 20 percent in less than 25 years.
In attacking the debt crisis, House Republicans have established these principles:
- Spur job growth and prosperity
- No changes for seniors age 55 and older
- Fulfill the mission of health and retirement security for all Americans
- Lift the crushing burden of debt
It is time to put those principles to work.