The United States of America faces a critical juncture in our history, grappling with historic inflation and other consequences of deficit spending, with debt at 98% of our total economy. Recent history proves that unchecked deficit spending and excessive debt lead to severe consequences.
In a recent joint article by Congressman Josh Brecheen (OK-District 2) and myself, we warn that not tackling our debt crisis head on could lead to dire economic turmoil.
For example, Italy’s sovereign debt crisis in 2011 exposed the perils of relying on unsustainable borrowing and led to skyrocketing borrowing costs, reduced access to credit markets, and an unemployment surge to 12%.
While the U.S. has not reached 12% unemployment, our addiction to borrowing, rampant inflation, and sky-high interest rates are setting up the perfect storm. At the time of its fiscal collapse, Italy suffered from out-of-control interest payments and its debt-to-GDP ratio was at 120%—a level that is expected to hit the U.S. by 2033. Also in 2033, we are expected to pay $1.4 trillion in interest payments alone on our national debt—that’s money flushed down the toilet.
Minuscule efforts here at home to restrain borrowing for upcoming Congressional appropriation bills, just to pay for annual overspending, are insufficient to prevent ultimate and severe hardship for the American people.
Ricardo Ries, Professor of Economics at the London School of Economics, reminded policy makers in a recent article published in the Journal of Economic Perspectives that, “public debt carries a risk of inflation…when debt is high, it may be tempting to let inflation rise.” The Biden Administration and the Federal Reserve have fallen prey to this temptation. The American people are now suffering the severe consequences of high inflation, and as a result, household credit card debt has subsequently exploded to a high of nearly $1 trillion.
Another great Oklahoman, Republican Study Committee (RSC) Chairman Kevin Hern, and RSC Budget and Spending Taskforce Chair Ben Cline of Virginia have put forth a courageous budget that would balance the budget in seven years, cut spending by $16.3 trillion over 10 years, and reduce Americans’ taxes by $5.1 trillion over 10 years.
It is a bold plan, and, as Ronald Reagan challenged Republicans almost fifty years ago, we need to be the party of “bold, unmistakable colors with no pale pastels” to turn our country away from a fiscal cliff.