In the News

OPINION: Up Fiscal Creek Without a Paddle

by Rep. French Hill
Arkansas Democrat-Gazette
November 12, 2023

It is disappointing to see a problem that I dealt with as a young congressional staffer 40 years ago only get worse: the national debt.

After a surging economy in the 1990s and two successive years of budget surpluses, the Global War on Terrorism, the 2008 financial crisis, and the recent global pandemic have wreaked havoc on federal finances.

Business as usual cannot continue, and House Republicans want to honor our Commitment to America, which includes fixing the broken system that plagues the current Washington landscape on government spending.

However, the debate is currently burdened by a refusal to compromise on small steps in the right direction and an unwillingness to acknowledge the principal drivers of our debt, which include Medicare and Social Security.

We lost our financial minds during the pandemic. Former U.S. Rep. John Yarmuth (D-Ky.), then Chairman of the House Budget Committee, declared that Congress should be in full support of so-called Modern Monetary Theory (MMT).

He said, "We do have the printing presses ... the government issued a lot of money, and nobody has ever been asked to pay off any of that national debt."

This MMT school of thought believes the only constraint to government spending is inflation. What nonsense and economic illiteracy!

In response to the pandemic, the Federal Reserve pumped billions and billions of dollars for month after month on a scale never seen before and for far too long.

Together, central bank liquidity and fiscal stimulus between February 2020 and September 2022 accounted for approximately $13.5 trillion, or nearly 59 percent of 2021 U.S. GDP. That is a staggering amount of "helicopter money."

While Republicans in the House and Senate have clawed back much of the 2020 pandemic stimulus funds, upon his inauguration, President Biden unleashed a torrent of new federal spending, mandates, and industrial policy.

The American Rescue Plan, the Infrastructure Investment and Jobs Act, the CHIPS Act, and the Inflation Reduction Act, along with the president's insistence on forgiving nearly $600 billion in student loans, all led the way in furthering our debt.

While the president insists he has cut the deficit, here are the facts: Total federal spending in fiscal year 2019 was $4.4 trillion with a deficit of $984 billion. In just five years, expected federal spending in FY24 is $6.4 trillion--up $2 trillion--with a 2023 deficit of $1.7 trillion.

You have seen the reaction to the 10-year Treasury in recent weeks, now reaching a yield of 5 percent. You have read ratings agency Moody's comments considering a downgrade of U.S. credit debt due to America's extraordinarily rapid increase in debt and debt service and lack of a serious approach to federal budgeting.

For example, interest on the national debt ending Sept. 30 was $879 billion, more than what we spent all year on transportation and veterans benefits combined. Bloomberg estimates annualized interest payments have now crossed $1 trillion.

Interest expense as a percentage of our budget is nearing 15 percent, which the International Monetary Fund (IMF) warns against for most countries--but not the United States--as we are the world's reserve currency.

To make matters worse, Congress' budgetary muscles have atrophied over the last three decades, rarely completing a budget or passing appropriations measures prior to the fiscal year end. It is a sad reality that must change.

My first exposure to concrete recommendations for wholesale changes to the congressional budget process was while working for former Sen. John Tower (R, Texas). Senator Tower was a budget hawk and the point person on President Reagan's commitment to rebuild America's military capabilities.

An original member of the Senate Budget Committee and chairman of the Senate Armed Services Committee, Senator Tower offered his budget restructuring proposal in his 1991 memoir "Consequences." He argued strongly for a two-year budget cycle to get off the "budgetary treadmill" and to let the congressional committees focus on their top task of oversight.

Congress has passed all appropriations bills only four times since 1974 and has not since 1996.

The inability of Congress to pass the 12 individual appropriations bills separately and on time has eroded the legislative branch's ability to exercise its "power of the purse" oversight on spending and policy.

As a result, the administrative state has grown unwieldy and more immune to oversight. In Article One of the Constitution, appropriations and oversight are the most fundamental responsibilities of Congress.

Our government is run from one dysfunctional continuing resolution after another, periodically punctuated by an unaccountable omnibus appropriation measure that pleases no one. Instead of going through the regular legislative process, continuing resolutions are cobbled together at the 11th hour by a few people and jammed through.

All the while, 60 percent of federal spending is considered "mandatory spending" and not subject to annual appropriations. These spending programs grow at three to four times the rate of macro-economic growth with little public discussion or oversight; rare, if any, votes for restructuring or reauthorizing are held in Congress.

What's to be done?

First, we should follow through with Speaker Emeritus Kevin McCarthy's debt ceiling initiative and consolidate the wins by cutting federal spending in FY24 below the level of FY23. We should cap domestic discretionary spending at 1 percent per year for the next six years.

Next, we must adopt a 1981-83 Alan Greenspan/Social Security-type bipartisan commission with a required congressional vote whereby the drivers of our debt and deficit--the mandatory spending programs--are reformed and placed on a sounder footing for the decades ahead.

The Greenspan Commission led to the 1983 amendments to Social Security, which included major changes to the program, like accelerating already scheduled payroll tax increases and raising the full retirement age. These bipartisan changes were important to consider in the long term due to the demographics of the aging population of the baby boomer generation emerging after the end of World War II. They ultimately improved the fiscal health of the program to this day.

Finally, Congress must reform its budget and appropriations process.

U.S. Rep. Steve Womack, my colleague who represents the 3rd Congressional District in northwest Arkansas, is the former Budget Committee Chairman. In 2018, he led the bipartisan and bicameral Joint Select Committee on Budget and Appropriations Process Reform. Like Senator Tower's recommendations of so long ago, that committee made several suggestions to address our budget process, such as establishing a commission to produce a 10-year plan to balance the budget and move to biennial budgeting with annual appropriations.

This, combined with Congress setting its own budget timeline early and initiating appropriations in the first calendar quarter of each year, will increase the likelihood of completing our constitutional work.

Ultimately, then-House Speaker Nancy Pelosi intervened, preventing the Select Committee's bipartisan and bicameral bill that made steps in the right direction from getting out of committee. There were also several proposals that were not agreed to that should be considered in future reforms. These include penalties for Congress for not completing its appropriations process, freezing the spending on unauthorized programs, and establishing debt-to-GDP targets in budget resolutions.

As a prosperous country for generations to come, we have grown wasteful and complacent in our largess. Administrations and congressional majorities of both parties are to blame. As we approach the government funding deadline on Nov. 17, we must settle FY24 spending, but more importantly, we must enact these reforms. Only then can we be confident in our long-term fiscal strength and resilience.