When stuck in a hole, stop digging.
Our national debt has surpassed $28 trillion. Yet, President Joe Biden has proposed digging $8.2 trillion deeper over the next 10 years. Under the president’s spending plan, debt, as a share of the economy in 2024, would rise to its highest level in our nation’s history, even higher than the debt-to-GDP ratio of 106% seen just after World War II.
We cannot continue to spend money without consequences. First, undisciplined spending threatens our national security. We cannot afford to confront the next pandemic, natural disaster or foreign conflict from a position of weakness. Second, excessive government deficits increase interest rates, crowd out private investment, reduce credit access and lower aggregate demand. Third, rising interest rates are a tax on the working class.
Unfortunately, President Biden’s $1.9 trillion American Rescue Plan continued our nation’s legacy of shortsighted big spending. Biden and congressional Democrats are now doubling down on their proposal to spend trillions more.
Consequently, inflationary fears have reached their highest point in years. From July 2020 to July 2021, the Consumer Price Index has risen 5.4%. We are experiencing the fastest inflation increase since the Great Recession. Hardworking Utahns will be crushed if the prices of everyday purchases such as gas, groceries, hotel rooms and car rentals keep rising.
The theory underlying this spending spree is Modern Monetary Theory. MMT posits that, because the federal government controls its currency, it can spend without restraint and print more money to cover any debts. MMT advocates claim we can simply ignore deficits instead of reducing them. While MMT is irresponsible, it also completely abandons traditional economic theory and fiscal responsibility.
To address our debt crisis, we must first address MMT. Warren Coats of The Johns Hopkins Krieger School argues that “MMT is an unsuccessful and empty attempt to convince us that we can finance the Green New Deal and a federal job program by printing money.”
While policies built upon MMT have gained steam in the U.S., the theory has a demonstrated track record of failure. Chronicling its application in nations such as Greece, Chile, Peru, Argentina and Venezuela, Steven Globerman of the Fraser Institute notes that policies built upon MMT “result in runaway inflation and a significant decline in the standards of living.”
Even while MMT pushes the left to abandon fiscal restraints, the right also has much to answer for. Between 2003 and 2020, under both Democratic and Republican administrations, the national debt jumped from $6.4 trillion to $27.75 trillion.
Federal spending cannot be treated like a game. For that reason, Rep. Blake Moore was an original cosponsor of the Fiscal State of the Nation Resolution, which requires the head of the Government Accountability Office to annually present on the nation’s fiscal outlook in a joint hearing of the House and Senate budget committees, calling on Congress to confront this crisis head on.
Next month, the federal government will hit the debt ceiling, which is a cap on the debt the federal government can accumulate to meet its legal obligations. On Sept. 21, House Democrats voted to suspend the debt ceiling without any discussion about future spending.
Congress has raised the debt ceiling dozens of times before, but this is an opportunity for leaders on both sides of the aisle to reconsider the impact of House Speaker Nancy Pelosi’s spending spree on our debt and the stability of our current entitlement programs as we assess an economy that is bouncing back from the pandemic.
Moore is working with constituents to tackle our debt trajectory. Next month, he and other community leaders will convene the first session of a debt and deficit task force in Ogden to identify pro-growth policies, ways to address entitlement spending, and waste in discretionary spending. The goal is to put our debt-to-GDP ratio on a downward trajectory and work toward implementing a balanced budget.
We must regain control of our spending and national debt, just as leaders from both parties did in 1997. After years of work, Leon Panetta, President Bill Clinton’s budget director and chief of staff, and John Kasich, GOP chairman of the House Budget Committee, achieved a balanced budget with bipartisan focus, giving us reason to be optimistic.
Today, our journey will be more challenging due to our interest owed and intense partisanship in Washington. But the American people need to know we can reverse this upward trend in our annual deficits, even if we don’t achieve a balanced budget right away. For those of us committed to fiscal responsibility, it is time to put our money where our mouth is.
Rep. Blake Moore, a Republican, represents Utah’s 1st District. Douglas Hervey is a partner at Cicero and leads its health care and private equity practice.