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Here's one Republican senator's response to a very brief e-mail critical of Republican behavior on the debt ceiling "negotiations." NH Senator Ayotte, a tea party favorite and Palin endorsee.
Thank you for contacting me regarding our grave fiscal crisis. I appreciate hearing from you.
Our total national debt stands at $14.3 trillion, or $122,000 per household, and we have seen three years of trillion dollar-plus deficits - with no end in sight. As we continue to borrow 40 cents of every dollar we spend, nearly half of our debt is foreign-owned, and our largest debt holder is China. A generation ago, just five percent of American debt was held by foreign nations. By spending beyond our means, we are rapidly ceding our fiscal autonomy to Chinese bankers and foreign financiers, many of whom do not share our priorities or our values.
This year, we are projected to spend $196 billion on interest payments to our debtors. If we do not change course, the non-partisan Congressional Budget Office (CBO) estimates debt payments will grow by more than 300 percent (to over $800 billion) in the next 10 years. Even worse, for every one percentage point increase in interest rates, CBO estimates that $1.3 trillion will be added to our mountain of debt. As spending on interest payments grows, there will be less money for domestic programs such as national security and health care.
Equally alarming, CBO currently projects our nation's gross debt will equal 100 percent of our economy by September 30 of this year. Some may ask why this matters. The answer can be found in an acclaimed study by economists Carmen Reinhart and Kenneth Rogoff, which concluded that, over the past two centuries, nations with gross debt levels above the 90 percent threshold will experience dramatically diminished economic prospects, including lower job growth and fewer economic opportunities.
The economic outlook does not get any brighter for our long-term fiscal future. The Government Accountability Office recently reported that our total unfunded liabilities over the next 75 years are $99.4 trillion, or $846,000 per household. Moreover, the Medicare and Social Security Trustees have reported that these programs are rapidly headed for insolvency as early as 2024 and 2036, respectively. If we stay on our current path, these programs will be nonexistent for our children and grandchildren.
Despite this grim outlook, it has been more than 800 days since the Senate last passed a budget plan. During that period, the nation has spent more than $7.3 trillion, including more than $439 billion in interest payments on the debt, and the national debt has increased over $3.2 trillion.
On August 2, the U.S. will reach its debt limit - the amount the country is legally allowed to borrow. This presents the President and Congress with an historic opportunity to end the federal government's harmful spending addiction. I strongly believe any attempt to raise the debt ceiling must be accompanied by significant long-term spending reductions and budget reform to end business as usual in Washington.
Unfortunately, some members of Congress and the Administration believe higher taxes are the answer to our fiscal crisis. With 9.2 percent unemployment and 25 million Americans unemployed or underemployed, the last thing we should do is raise taxes on families and businesses. Instead of raising taxes, I support efforts to overhaul our complex tax code, and I welcome a meaningful discussion that focuses on comprehensive tax reform. Federal tax reform should broaden the base and lower individual tax rates. I also support reducing the corporate tax rate to make our nation more competitive, and eliminating corporate loopholes and subsidies that do nothing to improve economic growth.
As a member of the Senate Budget Committee, I am committed to addressing our looming fiscal crisis and making the hard decisions to reduce our short and long-term spending. Reforms should include a Balanced Budget Amendment, statutory spending caps, significant spending cuts, and reform of entitlement programs.
One of the most important steps Congress can take to force Washington to tighten its belt is to pass a Balanced Budget Amendment to the Constitution. Putting Washington budgeting into perspective, the average New Hampshire household earned $63,000 in 2008. Using Washington logic, they would spend over $102,000 annually, which is over $39,000 more than they earn. This rate of borrowing and spending is fiscally unsustainable and irresponsible. That is why many of my Senate colleagues and I are pushing for a vote on this key spending reform, which would require the President to produce a balanced budget each year and ensure that Congress lives within its means, just like New Hampshire families do.
Congress also needs to put in place a strict cap on federal spending. I am cosponsoring bipartisan legislation that would establish a 10-year path to cap all spending to a declining percentage of the gross domestic product (GDP). This plan would eventually reduce spending from its current level of 25 percent of GDP to its 40-year historical level of 20.6 percent. This is a common sense proposal that should be passed.
Finally, the President must take a leadership role by presenting a plan that preserves our entitlement programs. Both parties need to work together to put these programs on a sustainable trajectory for current and future beneficiaries. Without reform, Social Security and Medicare - programs critically important to New Hampshire seniors (including my parents and grandparents) - will go bankrupt.
If we do not act soon, our country could go the way of Greece, Ireland, Portugal, and Italy, which have been forced to take severe austerity measures because of decades of poor spending decisions. I believe it is necessary to reduce our deficits to ensure that we do not suffer the same fate. The President's own fiscal commission warned that if we do not take swift and serious action to address our rising debt, the United States will face "the most predictable economic crisis in history." That is why I am committed to making the difficult decisions to reduce spending in order to preserve the economic strength of America for our children and grandchildren. We must act now.
Again, thank you for taking the time to contact me. As your Senator, it is important for me to hear from those I represent regarding the current issues affecting New Hampshire and our country. Please do not hesitate to contact me if I can be of any further assistance.
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