By Congressman Joe Pitts
On Monday night, the national debt hit a record $19 trillion, an increase of $8.3 trillion (43%) just since President Obama took office.
This is an alarming change, and it’s no wonder that so many Americans feel like their government and their country gone out of control. Not only are we not paying down our debt, we are adding to it all the time.
Just last week, the Congressional Budget Office (CBO) released a report that projects that the federal government will borrow another $544 billion just this year — a sum equivalent to the entire Argentine economy (the 25th largest economy on Earth).
This money will have to be paid back in taxes — there is no way around it. The American people have to live and work with a massive tax increase hanging over their heads. If we all split the bill evenly, we’d each be out over $150,000. To the handful of superrich, that amounts to pocket change. But for the 28% of the country who have no savings at all, and an estimated 62% who have less than $1,000 in savings, that is more than they can afford.
We have the most expensive government in history — at least $19 trillion more government than we can afford. We spend over a quarter of a trillion dollars each year just on interest payments on the debt — money that can’t be spent on education, or on jobs, money that doesn’t feed the poor.
To make matters worse, excess government keeps us from paying our debts by slowing down our economy. We found out last week that the economy dramatically slowed in the last three months to a 0.7% annualized growth rate. The average rate since World War II is five times that. No surprise then that the stock market dropped by over 1,000 points over the same three months.
So as this problem worsens and worsens, we are faced with the same options that we had when our debt was smaller and the situation easier: we can raise taxes, reduce our spending, or grow the economy.
Raising taxes won’t work for the reason just stated: it slows down the economy. Many governments have found that, by raising taxes, they actually get less tax revenue; many others (including Presidents Coolidge, Kennedy, Reagan, and George W. Bush) have found that, by cutting taxes, they have received more revenue. People make decisions based on what lawmakers do. What has happened in high-tax states — a quarter of a million people on net leaving Democrat-run states for Republican states just in 2013 — can happen to entire countries. When people move away, then they pay taxes somewhere else.
Put simply, taxes don’t make government more affordable; they just pay for it. Your check to the electric company pays your bill, but it doesn’t make your bill any easier to pay. Rather, we can make government affordable by making it cost less (reducing spending) and by increasing Americans’ wealth (economic growth).
Spending reduction goes right to the heart of the problem, since every dime spent is a dime that must be paid for with taxes. Reducing spending is reducing cost.
Economic growth means that the amount of value in the economy is increasing. This means that there is more money for raises and benefits, for new jobs, for more investment in research and development, and for buying the goods and services we want. When growth slows down or even stops, that puts more pressure on working people, whose jobs are threatened, and it drives up government borrowing to pay for government activities.
Government can’t create jobs; only growth can create. Government can redirect or redistribute wealth that already exists, but it can’t produce it. Government can’t even cause growth.
What Congress can do, however, is to clear away the roadblocks that bad government policies have set up between the people and economic growth. These include some $2 trillion in regulations on American companies that disproportionately impacts small businesses — and all new businesses are small. Excessive regulations hurt those small businesses that already exist, and often prevent new businesses from coming into existence in the first place. By preventing new economic activity, these regulations prevent growth, and everything that growth gives us.
In light of this alarming situation, our mandate is clear: shrinking government and growing the economy.
We’ve got 19 trillion reasons to do so.
Congressman Joe Pitts is a Republican who represents Pennsylvania’s 16th Congressional District in parts of Berks, Chester and Lancaster counties.