Unsustainable Federal Spending and the Debt Limit

The United States staggers under $19 trillion of debt, nearly half of it run up in the last 8 years. The interest on that debt is the fastest-growing component of the Federal budget. Within 5 years, it will consume more than we now spend for our entire defense establishment. The latest fiscal and economic projections by the Congressional Budget Office paint a very clear picture. Spending and debt are growing at an unsustainable pace, greatly increasing the risks of a sudden fiscal crisis during which investors would demand much higher interest rates to continue lending to the U. S. Government. Growing spending is driving debt to increasingly economically harmful levels. Projected deficits would push debt held by the public to 86 percent of GDP by the end of the decade, or about twice the historical average level. The organic law that established the Treasury Department in 1789 specifically says that it shall be the duty of the Secretary of the Treasury to digest and prepare plans for the improvement and management of the revenue and for the support of the public credit. The GAO clearly spelled out what, "Manage the revenue and support the public credit," means in 1985: "Treasury is free to liquidate obligations in any order it finds will best serve the interests of the United States." The Constitution commands that the public debt is not to be questioned, and this is the practical mechanism for it. Most State constitutions provide that the first call on any revenues is to maintain and protect their sovereign credit. In recent years, the Treasury Department has denied that it has either the ability or the authority to do so. The United States is on a fiscal collision course. Absent presidential and congressional leadership through the regular budget process, the debt limit is a key action-forcing tool that drives the attention towards the Nation's precarious fiscal state and enables lawmakers to leverage a potential crisis scenario for necessary and urgent policy reforms that might not otherwise come about.