Increase in Debt Ceiling Another Sign of Financial Mess

Increase in Debt Ceiling Another Sign of Financial Mess
Monday, November 22, 2004

As published in the Star Tribune on November 22, 2004

For the third time in three years, Congress raised the federal debt ceiling this past week to prevent the government from going into default. Although the Bush Administration dismisses the evidence, the need to increase the debt limit is a clear indicator that our fiscal health is not as rosy as President Bush would have us believe.

An Associated Press poll conducted immediately after the election revealed that by a 2-1 margin, voters want to cut the deficit rather than see more tax cuts. It is reassuring that Americans are taking notice of the financial mess even if President Bush fails to acknowledge the gravity of the situation. The President contends we can fight wars and give tax cuts to millionaires and big business without endangering our long-term prosperity, Social Security and Medicare benefits. Republican rhetoric does not match reality.

In 2004, the government spent a record $422 billion more than it took in. The Congressional Budget Office estimates the national debt will skyrocket to $6.8 trillion in a decade.

If a family were to spend money it didn't have like our federal government has, it would be on a path to financial ruin. Our country's annual federal budget is about $2.3 trillion. Our $422 billion deficit - expenses paid with borrowed money - represents an 18 percent overdraft. As most families know, borrowed money comes at a price. Families also know that interest accumulates on unpaid bills, giving you a larger bill than what you started with. Our country's debt situation is exponentially larger and getting worse.

The international exchange rate and value of our dollar is threatened. Interest rates are increasing because of the Republican fiscal mess, which means higher costs for our future mortgages, car loans and college loans.

Crass self-interest and a lack of leadership are producing massive debt for future generations so that we can give lavish tax giveaways to the most wealthy. The top one percent of households whose incomes average $1.1 million could buy a new Lexus with their 2004 tax cut, which will average $41,000. Those in the bottom fifth of households could buy a bicycle with their tax cut of about $230.

One reason people haven't panicked about federal deficits may be that in the '90s, Democrats had success in reversing them. At the beginning of the Clinton Administration, I chaired the House Budget Committee. I believed then - and still do today - that fiscal discipline is a requirement of responsible leadership. Our budget committee charted a course to balance the budget for the first time in a generation. We exceeded that goal, creating a 10-year projected surplus of $5.6 trillion. Combining fiscal discipline with a healthy economy, we climbed out of deficits and positioned the country to handle the huge Social Security and Medicare costs of impending Baby Boom-generation retirements.

We are now in a vastly different place. The budget surplus President Bush inherited at the beginning of his first term is gone, we have a weakened economy, and we are closer to Baby Boomers retiring. More than $200 billion has been spent or committed for wars in Iraq and Afghanistan, with another $80 billion needed in 2005. With no regard for the fiscal mess, in October, the President and Republican-controlled Congress approved $140 billion more in corporate tax breaks.

Budget choices make an administration's priorities clear. President Bush has chosen tax cuts for the wealthy and for big business. He has asked Americans to accept cuts in programs that invest in their future. He has pursued a costly war in Iraq with no end in sight and few partners to share the cost. As a result, he is choosing record deficits. He is also choosing shortfalls for Social Security and Medicare.

Those polled who expressed concern about the staggering deficit are right to be concerned. Enormous federal bills are fast coming due while President Bush pursues legislation sinking us deeper and deeper into debt. I guess you call this Republican fiscal responsibility.

• Martin O. Sabo, D-Minn., represents the Fifth Congressional District in the U.S. House of Representatives