Remember how lousy the economy was when President Obama was sworn into office in January, 2009? Unemployment nationwide was 7.8 percent, the Gross Domestic Product (GDP) was declining, 32 million Americans depended on food stamps to avoid going hungry, and the federal debt was around $10 trillion.
The President and Congress under the leadership of Nancy Pelosi and Harry Reid quickly responded with an avalanche of economic stimulus - massive deficit spending intended to get the economy moving by using the government to increase the demand for goods and services.
Two-and-a-half years later, unemployment nationwide is 9.1 percent, in the 2nd quarter of this year GDP rose just 1.3 percent, 46 million Americans depend on food stamps, the federal debt is $14.6 trillion and growing, and for the first time ever, the U.S. credit rating was downgraded by one of the major bond rating companies.
Trying to spend our way to prosperity hasn't worked.
Business leaders are smart enough not to be fooled by an economy temporarily boosted by federal spending rather than solid economic fundamentals. What they really want to see in Washington is evidence that Congress and the President are running the government in a responsible and prudent way. Along with a pro-growth agenda including tax reforms, cost-effective budgeting is part of what we need to do to restore confidence.
Accordingly, we have just completed weeks of intense negotiations over raising the federal debt ceiling. My Republican colleagues and I took the occasion to insist on tighter budgets and lower deficits in the future. Instead of increasing the federal government's borrowing authority with a business-as-usual attitude, we have established the precedent that the need to borrow more should be accompanied with commitments to spend less.
The debt ceiling agreement raises the $14.3 trillion borrowing cap by $2.4 trillion. It includes $900 billion in savings over the next 10 years, and it calls for a bipartisan committee to identify $1.5 trillion in additional spending cuts no later than Nov. 23. Failure to identify and approve such cuts will result in automatic reductions across much of the government.
Some, both inside Congress and out, reject the agreement, charging that it isn't tough enough. And, of course, they are right. Any deal which allows federal borrowing to go up by $2.4 trillion isn't tough enough. But it's the best we could do as long as the Senate and the White House are controlled by President Obama and his partisans.
It's a mistake to think we can triumph through some sort of Hail Mary pass. Rather, in a divided government, reaching our goal means advancing up the field through first down after first down. There are plenty of budget battles coming up in the months ahead which will give us additional opportunities to advance the ball.