By By Sen. Richard Shelby, Guest Columnist
Last week, the White House projected that the federal budget deficit will grow to a record $482 billion when the new fiscal year begins in October. This number should be shocking, not only to you at home, but to my fellow colleagues here in Congress who are challenged with determining how to spend your tax dollars. As our federal debt continues to spiral out of control, it is more important than ever for us to make the tough decision to cut federal spending on politically advantageous programs.
Throughout my tenure in Congress I have continuously advocated for a constitutional amendment to require the federal government to balance the budget to break the cycle of deficit spending. In fact, last year, I once again introduced a balanced budget amendment to the Constitution to ensure that the government does not continue to saddle our children and grandchildren with the current generation’s debts. Essentially, my amendment would require the United States not to spend more money than it receives in revenue, except in times of war or when suspended by a vote of three-fifths of both houses of Congress. I firmly believe that until the federal government is required to spend only the amount of money that it takes in, we will continue to write checks that the Treasury cannot cash.
Over the years, Congress has grown accustomed to annual deficits and massive government debt. Unfortunately, the out-of-sight, out-of-mind attitude many of my colleagues hold towards our debt has resulted in wasting about 14 percent of our federal budget on interest payments. In fact, interest payments on our nation’s debt consume approximately nine percent of the federal budget and represent the third largest item in the budget. In the President’s fiscal year 2008 budget, the Office of Management and Budget projected net interest costs of $261 billion. That is more than double the amount of money spent on education, training, crime prevention and transportation combined. Further, last year the total interest on Treasury debt securities was $430 billion. This is money that could be better spent on improving education, developing new medical technologies or better yet, returning it to the people who earned it.
The federal government is depleting national wealth at a rate twice as fast as the private sector can create it. The U.S. economic machine, businesses and employees, cannot continue to pay more taxes for the growing interest payments on the debt while the federal government borrows money that would otherwise have been available for economic development. When the government borrows money, it borrows at a cost to every American’s economic future.
The current economic times are difficult for many Americans and although Alabama is experiencing one of the best economies it has had in years, the realities of high fuel prices, increased food costs and an overall economic downturn is affecting everyone. Some of my colleagues in Congress believe that the best way to alleviate our nation’s debt is to increase taxes; however I believe that this would just add to our current economic woes. Instead, I argue that we could ease our nation’s debt while efficiently put more money into the hands of the American people by simply being responsible in our spending. A balanced budget would dramatically lower interest rates.
Further, if the government’s demand for capital is reduced, more money would be available for private sector use, which would generate substantial economic growth and create thousands of new jobs.
It is time to realize the true effects our current deficit will have on our children and grandchildren, and act quickly to prevent more debt. A balanced budget amendment is simply a promise to the American people that the government will spend their hard-earned tax dollars responsibly. We owe our children and grandchildren that much.