Washington Must Kick Its Addiction to Debt
The Committee for a Responsible Federal projects that with the passage of the American Rescue Plan, the national debt will reach a new record this year and rise to 113 percent of GDP within a decade. Below is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
While we are pleased that over the past year Congress acted boldly and effectively to fight the pandemic and the associated economic crisis, policymakers now must start paying for their priorities.
The recently-enacted American Rescue Plan was larger than necessary and poorly targeted. While it included many important and necessary elements – including money to contain the pandemic, extend unemployment benefits, and support struggling households – the bill also included policies that were clearly excessive, poorly targeted, or unrelated to the current crisis. These provisions bloated the costs and weakened the credibility of the overall package.
Though the ink has barely dried, we are already hearing calls to make some parts of the package permanent – which could mean as much as $2 trillion of further borrowing – or to pursue another deficit-financed spending package. Even in times of national crisis, Congress must serve as a responsible fiduciary of the nation's finances. That means not allowing the need to borrow in an emergency become an excuse to borrow for a host of other priorities as well.
The country entered this crisis over-indebted, having recklessly passed over $4 trillion of tax cuts and spending hikes during an economic expansion, rather than working to bring the debt under control. Despite this, more borrowing made sense during the crisis. But our leaders should have been more responsible before this emergency hit, and they will have to be once we get through it.
Along with the rest of the nation, we hope the end of the pandemic is in sight. In addition to good news on the vaccination front, there is now an astonishing $3 trillion of fiscal support in the pipeline and expectations of a robust economic recovery. Barring unforeseen complications, further borrowing should not be necessary. New tax and spending policies should be offset. Once the economy is recovered and strong enough, policymakers must go further by phasing in measures to address our unsustainable debt trajectory.
We remain highly concerned that in this polarized political environment, lawmakers will continue to cast aside fiscal considerations, instead falling for feeble excuses that borrowing is free, debt doesn’t matter, policies will pay for themselves, or favored policies are just too important to bother paying for. This fairytale approach to governing is leaving us highly indebted, vulnerable to changes in the economy, and dangerously unprepared for other threats we might face on the global stage or here at home.
From the start of this crisis, we’ve consistently made clear that lawmakers should borrow what is necessary to fight the virus and keep the economy afloat. We now urge Congress to take the long-term fiscal health of the nation seriously as well.
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