By Rep. Phil Gingery & M.D.
Published August 30, 2011
What do one of the leading credit-rating agencies, politicians, and American families all have in common? Dissatisfaction with the way the federal government has been handling the growing economic crisis that’s destroying our nation.
For the first time in our country’s history, our credit rating was downgraded from its AAA standing to a AA+ rating. This has many repercussions – instability in U.S. and international markets, uncertainty for businesses and investors, and the erosion of consumer confidence.
These ramifications are profound, but instead of discouraging the American people, they should serve as a wakeup call and a reminder of the heavy lifting needed in the weeks and months ahead if we’re to clean up this mess. Simply put, this downgrade is the final indicator that Washington’s spending spree must end, not just because House Republicans think so, but for the first time in our history one of the world’s leading credit-rating agencies does too.
Standard & Poor’s (S&P) downgraded the United States credit primarily because the government failed to provide policies necessary to stabilize its debt payments. Although the recent deal struck by Congress and President Obama provides a down payment on reducing the debt, there is still a long road ahead to recovery.
What’s worse, if there are not more substantial reductions in spending over the next few years, they could downgrade our standing again, sending another round of shock waves through the global markets and sinking our own economy further into recession. The bottom line is that we need more effective policies that will ensure the efforts made to cut spending today aren’t undone by politicians in the future.
The single best way to achieve this is through a Balanced Budget Amendment – it’s permanent, implemented nation-wide, and the best chance we have at saving our nation’s coffers from their biggest enemy — the federal government.
In July, the House passed the Cut, Cap and Balance Act to raise the debt ceiling and enact meaningful, long-term budget reforms. A critical component of this bill is the requirement to pass a Balanced Budget Amendment. This changes the dialogue in Washington because it shows that those who support it understand our problem and want to make sure the federal government holds itself to the same standards as responsible citizens and state governments.
And those standards are the practical solutions we need. For example, American families don’t get to spend limitlessly, just like small businesses can’t continue to grow and hire if they’re unable to afford it. Similarly, our states realize that balancing their budgets is necessary, with Vermont being the only state not to boast some form of requirement to do so.
Even Italy’s Prime Minister and government have proposed a Balanced Budget Amendment to their constitution to help ward off the growing financial disaster that their nation currently faces.
Being the successful country we are, surely we should be a global leader in demonstrating fiscal responsibility instead of being a lesson from which to learn.
In 1996, a Balanced Budget Amendment was defeated in the Senate by just one vote. Since then, we’ve added $9.2 trillion to our national debt. Some argue we don’t need a constitutional amendment to manage our budget responsibly, but the numbers say otherwise. Politics are fluid by nature, which is why spending cuts made today can easily be done away with later. This is why how much and how fast we acquire debt – to the peril of our nation – must not be left to chance at the mercy of the ever-changing political landscape. Rather, it must be solved permanently.
A Balanced Budget Amendment is a game-changer. It gives us our nation the framework it so desperately needs to live within its means, so we can continue working towards budget reforms that will reduce our mounting $14 trillion debt. We may not all agree on how to best solve the problem, but with an unemployment rate over 9 percent, and most Americans dissatisfied with what’s been done thus far, now is the time to implement meaningful, practical solutions that will produce results when it comes to resuscitating our economy.
It’s clear why Harry Reid and Senate Democrats declined to take up Cut, Cap and Balance, and therefore rejected a Balanced Budget Amendment: they want to preserve the ability to spend at will, still believing that we can tax and spend our way to prosperity. We, as Americans, know better than that.
A Balanced Budget Amendment means a better economic outlook – not just for credit ratings – but for businesses, families, and anyone who wants to see this country retain its greatness.
Rep. Phil Gingrey, M.D. is a Republican from Georgia’s 11th District, Member of the House Energy & Commerce Committee, and member of the Tea Party Caucus.