For thousands of years, we have heard somber warnings about becoming perpetual debtors. Thomas Jefferson addressed this “to preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.” So why hasn’t the national uproar about our soaring debt been louder? Why hasn’t Congress done something more about it than vote to increase the statutory debt limit to record heights?
One reason could be today’s warnings about our spiraling national debt are usually abstract and do not explain the real-world consequences. Elected officials warn, “The national debt is really bad, and we must reduce it!” These canned statements often sound melodramatic and don’t inspire action.
|
"... an increasingly large portion of Congress’ time is devoted to delaying the negative effects of crises of its own making... it must now react to multitudes of mini-emergencies on a routine basis to quell discomforts and save face." |
Complicating the problem is the fact that an increasingly large portion of Congress’ time is devoted to delaying the negative effects of crises of its own making. Because the federal government has interjected itself into the minute details of Americans’ daily lives – an involvement our Founding Fathers never contemplated – it must now react to multitudes of mini-emergencies on a routine basis to quell discomforts and save face.
These include everything from extending failing Big Government programs to bailing out failing corporations that made bad business decisions, at least in part, because of government-imposed mandates.
Contrary to Congress’s tendency to play Whack-A-Mole, the consequences of an ever-increasing national debt reveal themselves only gradually – and thus evade the Legislature’s radar.
Most frightening is the serious risk that by the time Congress is convinced the debt is worthy of its attention, our nation’s power will have already been stripped by our creditors and our independence irreversibly suppressed. Let’s take a realistic look at how this could happen.
|
"U.S. government officials keep begging China to continue investing in Treasury securities... How can these same officials demand, with a straight face, that China recognize Tibetan independence, halt religious persecution, or acknowledge individual or political freedoms?" |
Creditor nations have certain unspoken powers over debtor nations. Take China, one of the largest U.S. debt holders. U.S. government officials keep begging China to continue investing in Treasury securities to fund our record-setting deficit spending. How can these same officials demand, with a straight face, that China recognize Tibetan independence, halt religious persecution, or acknowledge individual or political freedoms?
Our political clout to influence other nations for good is being whittled away by our increasing debt.
On the other hand, creditor nations like Saudi Arabia, China and Russia are quietly building up the ability to influence U.S. policies. Think about what would happen if China refused to purchase further Treasury securities unless certain policy demands were met. We would be forced to acquiesce to China’s conditions -- or to brace for disastrous consequences, as we would be forced either to raise interest rates to lure other creditors or to print new money.
We know that China is dependent on Iran, among other unfriendly nations, for oil. Could the threat of double-digit inflation help China persuade Washington not to be too aggressive in blocking Iran from developing nuclear weapons?
Another disturbing fact is that nations with more cash on-hand build superior military capabilities, and therefore have more influence over those with weaker ones.
|
"The national debt also affects job creation. Creditor nations with cash reserves are buying ownership stakes in U.S. companies with sovereign debt funds or nationally owned corporations. This could influence decisions by those companies to relocate jobs overseas." |
The national debt also affects job creation. Creditor nations with cash reserves are buying ownership stakes in U.S. companies with sovereign debt funds or nationally owned corporations. This could influence decisions by those companies to relocate jobs overseas.
In addition, government mandates encourage banks to invest in the most risk-averse assets, like Treasury securities, which coincidentally finance the government’s deficit spending. Banks that could lend to small businesses are instead funneling capital into financing the national debt. What a waste!
It is time for Congress to wake up and see that the national debt is a crisis, that it is affecting the United States in very real ways. If Congress does not act soon, it may be too late.
The most frustrating aspect of this crisis is that the answer is so simple, yet seems beyond the grasp of Congress: Do not spend more than you take in. If we did not spend more than we have, we would not have trillion-dollar budget shortfalls. If we did not have massive budget shortfalls, we would not have massive debts that need to be financed by foreign nations.
The only way to force Congress to control spending, reduce the deficit and ultimately pay down our national debt is to bind its hands by amending the Constitution to require a balanced budget. I introduced this amendment on the first day of the 111th Congress, and today the legislation has the support of 179 bipartisan members of Congress.
This bill requires that total federal outlays not exceed total federal revenues. It cuts up Congress’ credit cards and frees us of our indebtedness and servitude to foreign nations.
Congressman Bob Goodlatte (R-Va.) serves as the vice ranking member on the House Judiciary Committee.
This article appeared originally in The Politico
