The federal government has run large deficits in recent years, bringing the national debt to more than $25 trillion. Furthermore, it has made promises of future benefits to its citizens (estimated to be in excess of $100 trillion) that will escalate the debt sharply higher in coming years. If anything in this country constitutes a crisis, this is it. If the situation is not corrected soon, the consequences will be grave not only for this nation but for other countries around the globe because of the dominant size of our economy and our interconnectedness with other national economies.
The problems caused by our profligate conduct are many. Here are three examples: (1) Our financial situation has been appropriately called the greatest inter-generational transfer of wealth in history, as the large buildup of debt must inexorably fall on future generations to resolve; (2) as our artificially low-interest rates of recent years are allowed to increase to their free-market levels, the interest cost on our debt will increase the annual deficit, exasperating the debt problem; and (3) foreign governments that have been financing our deficits through the purchase of U.S. Treasury debt may lose faith in the integrity of our government and reduce or suspend their financial support, with catastrophic results.
The federal budget is central to almost everything that Congress does, so it is imperative that it is handled in a rational, controlled manner; the quality of our new legislation relies on this process. But unfortunately, the current system is inadequate for the task and must be revised to ensure that all approved claims on the federal treasury are funded by Congress in the annual budget.
Unless all of our obligations are assembled in one budgetary process, we
will never gain control of our finances.
The budget review must also provide that all financial projections used in the evaluation of proposed legislation must emanate from a non-partisan unit that is independent of Congress and the president that is controlled by the states.
These reforms must start us on the path to rational budgets: they should require that clandestine raids on the treasury by Congress through tax credits, tax deductions, earmarks, diversion of federal receipts, and other practices employed to reward favored parties will be prohibited. After this step has been taken and the new procedures are in place, the path ahead for additional reforms will become clear. A rational budget will then be within our grasp!