"Cry For The U.S., Argentina"

Op-Ed

"Cry For The U.S., Argentina"

The following oped by Rep. Ed Royce appeared in today's Orange County Register.

It seems as though the administration has decided to pivot its messaging machine and portray a sense of fiscal responsibility. Unfortunately, the performance of this administration (and the Democrats that have controlled Congress the past three years) has shown little desire to rein in spending and the soaring deficits that have followed.

Further evidence that the rhetoric coming from Washington fails to meet reality came when the executive branch released its budget proposal Monday. This nearly $4 trillion budget spends more than any other in history. According to the administration's own optimistic projections, annual deficits will never return to sustainable levels. Debt held by the public will double over five years, triple over 10, and exceed 60 percent of gross domestic product this year -- a level unseen since the Second World War.

Every day, it seems, another economist describes our current budget situation as "dire" or a "train wreck waiting to happen." Still, some in government continue to protest, "Our economy is the largest in the history of the world. Who is to say we cannot sustain this level of borrowing and spending?"

History tells a different tale. While we have faced debilitating recessions and a Great Depression, from a budgetary point of view the U.S. is venturing into unchartered waters. Potentially the most relevant example of the devastation that comes from bloated government and excessive debt is Argentina. Once one of the world's emerging powers, on par with Australia, this South American country became a victim of its government's reckless spending.

During the 1940s the role of government changed markedly in Argentina; bureaucracy swelled exponentially, sector by sector came under government control, and the broader economy became centered around the political pull in Buenos Aires, the capital. It was a model introduced by rulers Juan and Eva Peron, and once adopted, the Peronist model was impossible to shake.

Despite pro-growth reform attempts, the power in Argentina was set on growing the central government, inflating bureaucracies and regulation and borrowing billions along the way. After years of this approach, inflation spun out of control (reaching 3,000 percent in 1983), and Argentina's public debt grew from 34 percent of GDP to 52 percent in 1999. During that time frame, government public debt more than doubled as a percentage of GDP. These government-induced burdens on the economy deflected foreign investment and led to the decay of a once-vibrant private sector. Sound familiar?

Investors grew more wary of the government's ability to pay its bills. At the end of 2001, Argentina defaulted on a $142 billion debt obligation; the largest failure of its kind in history.

While aspects like the sheer size and scope of our economy differentiates us from Argentina, Washington can heed several lessons. Most importantly: a government focused on high taxes, uncontrollable deficits, overregulation and a vastly swollen bureaucracy does not work. It will stifle private-sector growth and ingenuity in the near term and has the potential to create an economic disaster down the road.

The budget released Monday doubles down on this failed approach of tax, borrow and spend. Aside from creating the largest deficits and the largest tax increases in history, this proposal invigorates the movement to put Washington at the center of our nation's economy.

Our country was made great by our once-strong market-based economy, underpinned by an American character rooted in individual initiative, entrepreneurship and opportunity. Until Washington's policies recognize this critical reality, we run the risk of repeating the mistakes made in Argentina.

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