OPINION: The federal government should balance the budget

From Issue 3

Say, for the sake of argument, that you are a wealthy businessperson and you make $350,000 a year. Sounds pretty good, right? Except you have a major spending problem—you spent $440,000 in that same year. If this was a one time occurrence, perhaps you were investing in your own business and have an opportunity to make that money back, it is not too bad. However, if you did that every single year since 2001, not only would you be in a lot of debt, you would likely be running into serious legal trouble. This is terrible for an individual, but it is exactly the situation the federal government is in. Congress spent almost an entire trillion dollars it did not have. So far this year, it has already spent three trillion dollars more than it is taking in. Where is all this money being spent, and what can we do about it?

Money changes hands as one Sentry staffer pays back a debt to another. (Selby Ireland)

Every year, the federal government is required by law to pay the interest on its preexisting twenty seven trillion dollar debt. That, and all social programs paid for by the federal government make up around sixty-seven percent of the budget , and that percentage of the budget is rising as baby boomers reach retirement age and start taking out social security benefits. Social Security, Medicare, and Medicaid is the largest area of spending by the Federal Government, and it is required to spend it. This is because everyone who qualifies for these programs will receive the service, regardless of whether or not there is money left in the budget to pay for it. This means that there is effectively only around thirty three percent of the budget that can be dealt with.   This is called discretionary funding. Of discretionary spending, military spending is the largest expense by a large margin – the next biggest expense, Health and human Services is only ten percent of the military’s budget.

 At this point you are probably wondering—why should I care? The debt has increased quickly over the last few years, what effect does the national debt have on an individual’s life? There are several reasons why. First, as the national debt increases, so does the interest payment that has to be made each year. As more money is spent on the mandatory expense of interest, less money is available to be spent on other things. You know, the ones that actually provide services to people. Over time, this shift in expenses will result in a lower standard of living, as borrowing for discretionary spending becomes more difficult.

Second, as the debt increases, corporations operating in America will be viewed as riskier, necessitating an increase in the cost of newly issued bonds. This will require corporations to raise the price of their products and services to meet the increased cost of their debt obligation. Over time, this will cause people to pay more for goods and services, resulting in inflation and again, lower standard of living. Even further, interest rates for all loans will go up, bonds will be riskier, and as a country’s debt obligation increases, the risk of it defaulting on the loan increases which reduces social, political, and economic power on a global scale. 

So how do we fix it? Well, it is both simple and difficult at the same time. An easy way is to pass a Balanced Budget Amendment to the Constitution, necessitating, you guessed it, a balanced yearly budget. But how would Congress actually accomplish this? Well, there are lots of places where spending could be cut. Mandatory spending, specifically Medicare and Medicaid could use money more efficiently and therefore provide the same services for less cost. Similarly, military spending is quite high for a country that is not at war and has not been for a while. The US military is outpacing itself in its R&D, developing new weapons and vehicles before the old ones have run anywhere near their course, during peacetime. I am not here to argue whether this program or that expense should be cut. Everywhere the government spends your money, it does so recklessly and inefficiently. Requiring the federal government to operate on a balanced budget would permanently stop the interest payment from rising and hopefully result in more efficient and more responsible government spending.