Default must be ruled out, and sensible budget reforms are possible.
As Washington hits the $31.4 trillion debt limit (and begins using accounting gimmicks to borrow until summer), the new Republican House majority is gearing up for a fight to extract budget savings. There’s a saying that warns, “Never take a hostage you are not willing to shoot.” Achieving any success requires learning why similar past efforts failed, enforcing a more disciplined message, and being realistic about which reforms are achievable when holding a hostage that you won’t shoot.
The debt picture should shake Congress out of its borrowing spree. The national debt has doubled over the past decade. Over the past three years, Washington has borrowed more than $7 trillion, and annual deficits are projected to soar past $2 trillion within a decade — or $3 trillion if interest rates continue rising. Within a few decades — under the Congressional Budget Office’s rosy scenario — interest on the debt will become the largest federal expenditure and consume nearly half of all tax revenue. If interest rates continue rising, interest costs could consume 70 cents of every tax dollar within three decades. The total 30-year deficit projects to more than $100 trillion, pushing the debt to nearly double the size of the entire economy.
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
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