By Senator Olympia J. Snowe
When our Founding Fathers signed the Declaration of Independence, I am certain they did not envision that 235 years later, foreign countries would own a significant percentage of our national debt. We need to redouble our efforts to keep our nation secure and free from the tremendous debt that currently plagues our federal government.
With our $14.3 trillion national debt growing larger every day, our national and economic security is at stake. Overseas central banks, particularly those in Asia, have been huge buyers of U.S. debt in recent years—and they own over a quarter of marketable Treasuries.
Foreigners own a total of $4.4 trillion, or approximately 47 percent of the federal debt held by the public, according to the Treasury Department. China and Japan are the biggest two foreign holders of Treasuries, each holding approximately 20 percent of our total foreign debt. Oil exporting countries hold another five percent.
Americans are rightly dismayed by the chaotic nature of the budgetary process and the failure of Congress, time and time again, to budget just like families and small businesses. Sadly, the federal government has only managed to balance its budget five times in the last 50 years. In corporate America and our schools, a one-in-ten success ratio is considered a failure. When there is failure, self-assessment and tough choices are necessary.
On May 2, the United States reached its previously authorized statutory debt limit. This limit, however, hasn’t kept Congress from spending beyond its means. In the past decade alone, Congress has authorized an increase in the debt limit 10 times.
In spite of reaching a legal “breaking point” in spending, we continue to spend approximately 40 cents of every dollar. As a result of the government’s unrestrained spending binge and inability to live within its means, the creditworthiness of the nation has been seriously endangered. In April, S&P downgraded the nation’s economic outlook to “negative,” and in May, Moody’s threatened to downgrade the nation’s credit rating if lawmakers are unable to get a handle on the nation’s looming debt crisis.
More recently, the International Monetary Fund cut its forecast for U.S. economic growth, warning that Washington and debt-ridden countries were “playing with fire.” The IMF urged immediate action to reduce budget deficits. It is no surprise, then, that Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, views the national debt as the single biggest threat to our national security, an opinion shared by a majority of Americans in a 2010 Gallup poll that tied federal debt with terrorism as the greatest danger to our future.
On June 23, the non-partisan Congressional Budget Office (CBO) confirmed precisely what American taxpayers already knew: the size and scope of our nation’s debt problem is simply unsustainable. In a report that showed the nation’s public debt rising to 190 percent of the gross domestic product by 2035, CBO asserted that our “growing debt also would increase the probability of a sudden fiscal crisis,” and concluded that “the explosive path of federal debt underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.”
Our nation simply cannot afford to dither on the issue of debt any longer.
Unfortunately, Congress has demonstrated its utter inability to impose fiscal self-restraint. Last Congress, there was no budget, no spending plan and no final decision on funding levels for the whole fiscal year. That is no way to run a government.
If we are to get our fiscal house in order and meaningfully reduce the nation’s unsustainable debt and deficits, Congress must enact the self-enforcing tools and instruments required to rein in expenditures across multiple Congresses and generations. One of these vital tools is a balanced budget amendment to the Constitution, and I regret the Senate’s failure to endorse a motion to take up this critical measure.
What worked in the past to restrain government spending and provide the much needed checks and balances are the budget enforcement mechanisms, such as sequesters and spending caps under Gramm-Rudman-Hollings and Pay-Go from the 1990s. I have also long believed that a balanced budget amendment to the Constitution is necessary to ensure the sustainability of long-term fiscal responsibility in Congress.
Biennial budgeting would also provide an opportunity for Congress to engage in a meaningful evaluation and oversight of our fiscal policies in the alternating years. A combination of these kinds of measures would yield real savings and show real commitment to the American people and reassure the bond markets that we are serious about the nation’s fiscal issues.
As we celebrate the birth of our nation and the promises of freedom and liberty upon which it was founded, we must commit to our obligation to leave a nation just as free and prosperous for future generations. Indeed, government’s budget problems are not going to be solved without earnest consideration and deliberation. That’s what America’s working families sent us here in Congress to do and how leaders before us have tackled challenges.
It is time we approached the monumental task of fiscal sustainability and independence with the seriousness it deserves.