The Dallas Morning News
President Bush told the nation in his State of the Union address that "we will not pass along our problems to other Congresses, other presidents and other generations."
But last week, the administration's budget projected a $307 billion deficit for next year and deficits for as far as the eye can see - even as the administration pushes a new $674 billion tax plan and contemplates military action in Iraq that could cost hundreds of billions of dollars more.
For us, it seems like deja "voodoo economics" all over again.
Back when we were new members of Congress, Ronald Reagan promised the American people that we could have it all: huge tax cuts, a major defense buildup, a strong social safety net and a balanced federal budget. The Reagan plan, of course, was derided as "voodoo economics" by the president's father, George H.W. Bush. And, indeed, it cast a spell on our fiscal health that took 15 years to break.
The federal budget deficit doubled during Mr. Reagan's eight years in office and then crested at $290 billion under the first Bush administration in 1992. The national debt quadrupled to more than $4 trillion during the same period, and interest on the debt grew to more than $200 billion annually.
In response, a bipartisan consensus developed that we couldn't continue to allow deficits and debt to spiral out of control. Hard decisions and tough votes ensued. But the dividends of fiscal discipline were enormous: the longest peacetime expansion of the American economy in 50 years, four straight years of budget surpluses, record low unemployment, record low poverty rates and record high homeownership.
But now, our nation is back standing at the precipice of the fiscal abyss.
The Bush administration, which inherited a $127 billion surplus when it took the reins of government, acts unconcerned about a return to deficits. Mitch Daniels, the director of the Office of Management and Budget, has urged us not to "hyperventilate." A $300 billion deficit would be "small" in relation to the size of the overall economy, he argues, without a hint of irony that it would be the largest budget deficit in American history and that the GOP has made balanced budgets a campaign staple.
Furthermore, say apologists for the administration's economic policies, this historic fiscal U-turn resulted from the horrific terrorist attacks of Sept. 11 and a stagnant economy. But those arguments ignore the budget office's own estimate that 45 percent of the deterioration is a result of the enacted $1.7 trillion tax cut and other policies proposed in the president's budget.
In trying to put this fiscal free fall into perspective, it is only fair to ask: Who cares? The short answer is: Everyone should. Virtually all economists agree that budget deficits place a drag on the economy that will reduce future income and living standards.
As Alan Greenspan, chairman of the Federal Reserve Board, said in September, "History suggests that an abandonment of fiscal discipline eventually will push up interest rates, crowd out capital spending, lower productivity growth and force harder choices upon us in the future."
Higher interest rates mean higher mortgage, student loan and car payments. The millions of American homeowners who have refinanced their mortgages can testify to that. For example, if you obtained a 30-year mortgage in the amount of $150,000 at 6 percent rather than 8 percent interest, you would save $2,400 annually.
In addition, budget deficits increase the national debt (currently $6.4 trillion). Interest payments on the debt constitute the third-largest spending item in the federal budget (after Social Security and defense), and the only way to eliminate that "debt tax" is to eliminate the debt.
Between 1997 and 2001, we made a good start, reducing the debt by $450 billion. But despite the president's assurances that "paying off debt is a priority," it is rising again and will cost our nation an estimated $2.1 trillion over the next five years.
Just like interest payments on a credit card, those are resources that won't be available for other crucial needs - insuring some of the 41 million Americans who lack health insurance, providing prescription drugs to the 13 million Medicare beneficiaries who have no coverage at all, strengthening Social Security and Medicare, expanding port and border security and investing in our education system.
Those are priorities that a compassionate, secure nation must not ignore. It isn't too late to reverse course and embrace a policy of fiscal discipline that boosts our economy and promotes long-term growth. We should begin today to do just that.
U.S. Rep. Charles Stenholm of Stamford is the ranking Democrat on the House Agriculture Committee. U.S. Rep. Steny H. Hoyer of Maryland is the Democratic whip.