Former Federal Reserve Chairman Alan Greenspan recently noted that under President Bush, “little value was placed on rigorous economic policy debate or the weighing of long-term consequences,” adding “‘deficits don’t matter,’ to my chagrin, became part of Republicans’ rhetoric.” It is for these very reasons that our country is now at the brink of a fiscal crisis. Bush and the Republican majority traded sound fiscal policies for out-of-control deficit spending, risking the future economic security of all Americans. As a result, we are now faced with serious, long-term problems that require serious, long-term solutions.
The irresponsible fiscal policies that marked the past six years transformed a projected 10-year budget surplus of $5.6 trillion into record deficits and increased our nation’s debt by $3 trillion to an unprecedented $9 trillion. That’s $30,000 for every man, woman and child.
Foreign-held debt alone has more than doubled since 2001. Bush has borrowed more money from foreign countries than all previous presidents combined, and consequently, more than 80 cents of every dollar of new debt since 2001 has been purchased by foreign investors. China alone has increased its holdings of U.S. Treasury securities by nearly 500 percent in the past six years.
Interest on the national debt will cost American taxpayers $235 billion in 2007 alone — a “debt tax” that is seven times the amount we spend on the Department of Homeland Security.
In his testimony before a recent House Budget Committee hearing, Robert Bixby, executive director of the Concord Coalition, stated: “Those who say that deficits don’t matter are not paying attention to interest costs. Even now, net interest is a bigger expense than the wars in Iraq and Afghanistan or the federal government’s share of Medicaid.”
Deficits do matter, and the Blue Dogs are unwilling to pass along the undue burden of this “debt tax” to future generations of Americans.
In January of this year, the Blue Dogs put partisan rhetoric aside and led the way as the new Congress reinstituted “pay-as-you-go” budget discipline. PAYGO rules proved successful in reining in government spending and bringing the budget to balance in the 1990s, until the Republicans allowed them to expire in 2002. The results of this speak for themselves — budget deficits in the past six fiscal years that, compounded by the growing interest payments we must pay to service this debt, produced more than $3 trillion in new national debt.
At the beginning of the 110th Congress, skeptics doubted the ability of Congress to adhere to such a strict standard of fiscal discipline. Now, we’ve reached the end of the fiscal year and every one of the approximately 360 bills that have passed the House has complied with PAYGO. A recent report by the House Budget Committee shows that the House has required significant PAYGO offsets for the farm bill, the College Cost Reduction and Access Act and the Children’s Health and Medicare Protection Act, which included gross mandatory spending cuts of $70.7 billion by 2012.
There has been no shortage of partisan rhetoric on this issue, but the reality is clear. As a direct result of PAYGO, the House has passed spending cuts totaling $276 billion over 10 years. In fact, over 80 percent of the increases in spending for priority programs have been offset by cuts in lower-priority or wasteful spending. This success is a testament to the Blue Dogs’ commitment to putting an end to out-of-control deficit spending and bringing true fiscal accountability to Washington.
As Blue Dogs, we have remained committed to PAYGO because we believe in making the federal government live within its means, just as American families do. And the people agree. A recent Washington Post-ABC News poll shows that Democrats have a greater share of the public trust on the economy and the handling of the federal budget deficit than do Republicans. This is no accident.
Putting PAYGO rules in place has been a good first step. Now, Congress must strengthen its commitment to fiscal discipline by reinstituting statutory PAYGO. House Budget Chairman John Spratt (D-S.C.) recently took another step in the right direction by holding a hearing to discuss the reinstitution of statutory PAYGO, and the Blue Dogs will continue to push for passage of this important legislation.
In January, we inherited a fiscal crisis marked by unchecked deficit spending and exploding debt. We refuse to pass this burden on to our children and grandchildren. For the first time in six years, Congress is imposing real fiscal discipline on itself, and PAYGO is finally forcing Members to make the tough decisions necessary to bring our budget back to balance. As Blue Dogs, we are committed to addressing the country’s long-term fiscal challenges, and we will continue to put politics aside in order to provide a better economic future for all Americans.
Reps. Allen Boyd (Fla.) and Mike Ross (Ark.) are members of the Blue Dog Coalition of moderate-to-conservative House Democrats.