Getting our fiscal house in order has become more than just an economic issue; it’s a moral imperative. Every dollar of deficit spending must be borrowed, with the bill sent to our children to pay back. As president, Mitt Romney will ask a simple question about every federal program: is it so important, so critical, that it is worth borrowing money from China to pay for it?
Excessive government spending is also harming the economy by skewing the market place and creating high levels of uncertainty. As federal funds slosh through the economy, they lift up some enterprises at the expense of others. In an environment where the government is picking winners and investing huge sums in projects of questionable value, private entrepreneurs across the economy cannot have confidence that their own investments will pay off. Aware that such spending cannot continue indefinitely, business owners also have a difficult time predicting how demand will shift from year to year and how to invest accordingly. The only recipe for fiscal health and a thriving private economy is a government that spends within its means.
Since President Obama assumed office three years ago, federal spending has accelerated at a pace without precedent in recent history, taking us from an already staggering $3.5 trillion in federal spending in 2010 to a projected $5.6 trillion within the next decade. This sharp rise has been entirely a matter of choice. Even as federal spending remains wholly within our control, Washington is spending money in an out-of-control fashion.
One traditional yardstick for gauging whether government is living within its means is spending as a percentage of GDP. Since the 1950s, federal spending as a percentage of GDP has hovered around 20 percent. When President Obama took office, it shot up to 25 percent, a level not seen since World War II. Before the recession, the federal government spent $25,000 per household. That number has now soared past $30,000 and is on track to hit $35,000 within the next decade.
Our untenable spending habits were at the root of this past summer’s crisis over the debt ceiling. President Obama’s insistence on a “balanced approach”—by which he meant a combination of spending cuts and tax increases—would have put a seal of congressional approval on a baseline level of spending significantly higher than when he took office. That is precisely why the President’s approach had to be soundly rejected. He wanted to move the country in the wrong direction of more taxes and more spending at a time when both are smothering the economy.
After three years of President Obama, many now question whether we can ever return to fiscal sanity, let alone fiscal strength. A point of no return may well be approaching — a decade of huge deficits could drive our principal payments and interest rates beyond our reach while starving the economy of the capital it needs to grow.
Fortunately, the American economy’s tremendous capacity for growth gives the country one more chance to correct course. Mitt Romney has spent his career executing turnarounds in the private sector, the Olympics, and state government. He will bring to Washington the turnaround philosophy it so badly needs.
Set Honest Goals: Cap Spending At 20 Percent Of GDP
Any turnaround must begin with clear and realistic goals. Optimistic projections cannot wish a problem away, they can only make it worse. As president, Mitt’s goal will be to bring federal spending below 20 percent of GDP by the end of his first term:
Take Immediate Action: Return Non-Security Discretionary Spending To Below 2008 Levels
Any turnaround must also stop the bleeding and reverse the most recent and dramatic damage:
Follow A Clear Roadmap: Build A Simpler, Smaller, Smarter Government
Most importantly, any turnaround must have a thoughtful, structured approach to achieving its goals. Mitt will attack the bloated budget from three angles:
If pursued with focus and discipline, Mitt’s approach provides a roadmap to rescue the federal government from its present precipice. But that respite will be short-lived without a plan for the looming long-term threat posed by the unsustainable nature of existing entitlement obligations. Learn more about Mitt’s proposals for entitlement reform: [links to Medicare and Social Security]
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