Original Op-Ed in the Okanogan Valley Gazette-Tribune
In 1975, Noble prize winning economist Milton Friedman published, There’s No Such Thing as a Free Lunch. In his book, Dr. Friedman exposed the myth of the “free lunch” which is that “somehow or other, government can provide goods and services, can spend money, at nobody’s expense.” Given the level of spending by the federal government, it appears that many politicians have completely bought into the free lunch myth.
Since President Obama took office we have spent $6.1 trillion, borrowed $2.6 trillion and we now have a $13 trillion debt. We find ourselves facing the largest federal debt as a percentage of GDP since just after World War II—94%. According to National Bureau of Economic Research economists Carmen Reinhart and Kenneth Rogoff, a ratio above 90% slows economic growth by one percent. Even the President’s own economic advisors claim that a one percent increase in GDP growth can create almost a million jobs. To allow our debt to explode is to kill jobs.
Unfortunately, the administration is choosing to let the debt spiral further out of control. A Treasury Department report released this summer estimated that the debt will increase to 102% of GDP by 2015—the same year interest on the debt will account for nearly 15% of federal spending. Don’t be surprised if businesses shed more jobs as the growing national debt increases economic uncertainty.
This is precisely why I have taken a strong stance against out of control spending and borrowing. I have cosponsored a Constitutional amendment that would require Congress to pass a balanced budget unless two-thirds of the House and Senate find that circumstances necessitate that the limit be overridden.
The need for a balanced budget back goes back over two hundred years. In 1798, Thomas Jefferson wrote, “I wish it were possible to obtain a single amendment to our Constitution… taking from the Federal Government the power of borrowing. In his Farewell Address as President, Ronald Reagan said there were two things he wished he had accomplished while in office: A Line-Item Veto and a Balanced Budget Amendment. We should heed the Gipper’s wisdom once again.
We need to remember, however: The reason we have a budget crisis today isn’t because Washington taxes too little; it’s because Washington spends too much. That’s why the best way to balance the budget is by cutting government spending; not by raising taxes. Therefore, President Obama’s decision to allow tax increases on January 1, 2011 will seriously damage our chances of an economic recovery. Even the President’s recently departed Budget Director said that letting the tax cuts expire would make the jobs market even worse. As President John F. Kennedy once said, “An economy hampered by restrictive tax rates will never produce enough revenue to balance our budget, just as it will never produce enough jobs or enough profits.”
Higher taxes, coupled with massive increases in government spending causes business owners to lose faith that the government is capable of responsibly managing its finances. Business owners know that those debts will have to be repaid. The 1099 provision in the massive health care law requiring businesses to report all transactions over $600 is a perfect example of how the government squeezes businesses—particularly small businesses—whenever it needs to pay for its spending addiction.
Increasing taxes to pay for more spending is not the answer. This is why I have cosponsored a bill that would repeal the 1099 provision in the health care law and prevent small businesses from bearing the consequences of the government’s irresponsibility.
In the last two years, we have learned at least one valuable lesson: government spending cannot create long-lasting jobs. The whole world has seen the flaws in this philosophy. As one British Member of Parliament recently said, “We can’t spend our way out of a recession, and we can’t borrow our way out of debt.” It’s time for Congress and the President to do what works: cut spending, keep taxes low, and allow the economy flourish; this is the only way to create real, lasting jobs.