While health care reform has dominated the headlines, the budget process is moving forward in Congress. Congress, without my vote, is determined to spend $3.8 trillion in the next fiscal year. That plan also includes tax increases and limits to deductions to increase the revenue for the federal government to the tune of $2 trillion. Even if that were to happen, the budget would still be $1.6 trillion short. That means over 40 cents of every dollar we spend will have to be borrowed, primarily from the Chinese government.
Each year the federal government spends more money than it takes in from revenue. The difference is our annual deficit and that is money we have to borrow. That annual deficit, the difference between revenues and expenditures, is then added to our national debt.
In January, on a straight party-line vote, the debt limit was raised to $14.3 trillion with no plan on how or when to pay it down. The Congressional Budget Office said they anticipate the debt to increase by another $9 trillion in the next decade.
Recent news reports have been highlighting the debt problems of Greece. That country's debt has reached 95 percent of their gross domestic product (GDP). GDP is a measurement of a country's economic output in one year, so their debt is nearly equal to the value of everything they produce in one year. The Greek economy is in chaos and there are protests against government cutbacks.
The European Union is discussing how to rescue the Greek government, which is attempting to put into place austerity programs to pay down their debt so they can refinance and avoid a financial collapse.
So what does the financial crisis in Greece have to do with the United States? At the end of 2009 our overall debt was 84 percent of our GDP. We are edging closer to the 90 percent that some say is the tipping point for a financial collapse. An interesting, but alarming, article entitled Growth in a Time of Debt was recently published in which the economists provide convincing evidence that once a country's debt to GDP ratio hits 90 percent it has a profound negative and irreversible impact on a country's growth.
We must not let that happen.
It is beyond time to get our financial house in order. America must cut its spending and recognize that we do not have a no-limit credit card to fund everything everyone wants. Like hard-working Idahoans, we must prioritize and say no to things that are not absolute essentials.
If we don't stop this runaway spending, we are ensuring for ourselves, our children and our grandchildren a bleak financial future.