Q&A: Budget Blues Bleed Red Ink

Q: What’s the 10-year forecast for the federal budget and its impact on the economy?

A: According to projections released in February by the nonpartisan Congressional Budget Office (CBO), dark clouds loom on the federal government’s fiscal horizon. The CBO crunches numbers for a 10-year window to inform Congress and the White House about revenue and spending projections. After years of reckless, post-pandemic spending pushed by the Biden administration, this gloomy fiscal report card should come as no surprise. Once again, CBO’s estimates project red ink as far as the eye can see. As CBO keeps score on the widening gap between revenue and spending, Washington’s budget blues continue from one year to the next. Instead of working to restore fiscal sanity to the federal ledgers, Washington keeps digging a bigger hole. It’s time to stop the bleeding.

Let’s put this in context. CBO outlined how under current law, publicly-held debt as a share of the economy – gross domestic product (GDP) – within four years will breeze by the record set in the wake of World War II. Keep in mind that for 45 years between 1962 to 2007, the debt to GDP ratio averaged 35 percent. This year it’s on track to reach 99 percent. Within the next generation, publicly-held debt is forecast to reach up to 172 percent of GDP in 2054. And today, net interest costs have nearly doubled since President Biden took office. That’s because President Biden ignored warnings that his so-called American Rescue Plan Act would fuel the fires of inflation. The Fed hiked interest rates to tame inflation in the economy. In turn, higher interest rates take a bigger bite of the budget to service the debt. That shrinks what’s left of the federal pie that otherwise could be used for tax cuts, border security and government services for the American people. Starting this year, interest costs will surpass national defense spending. Next year, interest costs will swallow up a larger share of GDP than any other year on record. Meanwhile, deficits are large and getting larger; CBO projects the federal government’s overspending will exceed $1 trillion in each of the next 10 years. Washington must get its fiscal house in order sooner, rather than later. That will require political leadership.

As ranking member of the Senate Budget Committee, I’ve called upon the White House and my colleagues to join together to lead us out of our current fiscal crisis. Unfortunately, for four years running President Biden blew past the deadline set by federal law to submit a budget proposal to Congress for the new fiscal year that starts Sept. 30. Congress certainly doesn’t have much to crow about either. Since the fiscal calendar flipped on October 1, the federal government has been operating on a series of continuing resolutions that keep spending levels at the previous year. The stopgap funding vehicles and reckless spending habits in Washington certainly set a poor example to U.S. households. As historic inflation pushed up the cost of living, credit card debt among Americans broke a record at the end of 2023, reaching $1.3 trillion.

Q: What will it take to straighten out the federal budget?

A: It requires presidential leadership to set the tone for fiscal responsibility and congressional action to tighten the purse strings. President Biden has an opportunity to set the table for fiscal discipline in his State of the Union address on March 7. In his first annual message to Congress, George Washington praised the merits of sound fiscal policies “as a matter of high importance to the national honor and prosperity.” As we celebrate Presidents’ Day this month, that message from our nation’s first president deserves repeating. Our republic was founded on the principle of limited government and the American people in the 21^st century deserve nothing less. Consider lessons learned by President Bill Clinton when he pushed for a government takeover of health care. Americans sent a resounding message in the 1994 midterm elections to stop government overreach. Republicans ran on a platform called the Contract with America that flipped the House of Representatives for the first time in 40 years, forcing President Clinton to pivot and declare the “era of big government is over” in his 1996 State of the Union address. With Republicans at the wheel in Congress, President Clinton changed his tax-and-spending tune and sang from the same song sheet that helped Congress and the White House deliver a balanced budget for the first time in 30 years. President Obama conceded a “shellacking” when his party lost 63 seats in the House during his first term after pushing a partisan tax-and-spend agenda. The nation’s 46^th president ought to take a cue from history and rein in government spending. Last summer, President Biden had to be dragged kicking and screaming to agree to even modest spending restraint as part of the Fiscal Responsibility Act, which tied an increase in the debt limit with caps on discretionary spending. On the current trajectory by CBO’s estimates, annual deficits will exceed levels only recorded during crises: the COVID-19 pandemic, the Great Depression and the aftermath of World War II. Washington needs to stop binge spending and start belt tightening. Otherwise, Americans will soon find themselves paying more to cover national debt and interest costs rather than funding programs and services that matter to their families.