As Congress continues to debate whether to raise the debt ceiling as an answer to the looming debt crisis, many of us have questions about where our country is economically, how we got here, and what can be done to preserve our nation for the next generation.
What is a Debt Crisis?
Federal debt typically is measured as a percentage of the nation’s Gross Domestic Product (GDP). The GDP is one of the primary indicators used to gauge the economic health of the economy and is defined as the total dollar value of all goods and services produced over a specified time period. As a percentage of GDP, our federal debt has increased to the point that our nation's debt threatens to rise to a level higher than our GDP.
What Created the Debt Crisis?
In simplistic terms, the debt crisis was created by a serious increase in spending coupled with a simultaneous weakening of the United States economy. In the past decades, even though federal spending increased, the percentage of debt vs. GDP decreased due to strong economic growth. Because the GDP increased many times more than what we were borrowing for spending, the percentage of debt vs. GDP remained low. As we enter our third consecutive year of trillion dollar deficits due to unprecedented spending increases, the country is borrowing more money and taken on too much debt in a time of economic stagnation. This causes the percentage of debt vs. GDP to rise.
How Do We Solve the Debt Crisis?
The President and many members of Congress advocate increasing the federal debt ceiling so the United States can continue its spending spree. The debt ceiling is the alleged limit of debt the country can borrow. Historically, whenever the debt ceiling has been met, regardless of party, Congress votes to increase the ceiling. Jimmy Akin has a great analogy to help understand the debate over the debt crisis and the debt ceiling in a piece titled, "US *Desperately* Needs a New Credit Card."
Chairman of the House Budget Committee, Rep. Paul Ryan (R-WI) released a short video explaining the debt crisis and his serious proposal to get the country out of the debt crisis.
Even though the law requires Congress to pass a budget yearly, 799 days have passed since the Democrat controlled Senate passed a federal budget. Despite his public addresses, the President has not submitted a budget proposal, only giving a speech that vaguely outlines possible budgetary measures.
Tough Decisions Need to be Made
House leadership in Congress is ready to tackle the incredible deficit spending that is crushing our country, acknowledging that this task is something many of them were elected last year to do for the American people.
Cuts of the magnitude needed to address Congress’ runaway spending are not easy to make. You can't address our massive spending and debt without making cuts to large, popular programs. Everyone will fight for their piece of the pie. These cuts are not going to be popular, but in the time of economic instability we want our representatives to take on the big issues, look at each appropriation, and make the hard decisions necessary to get our nation back on sound economic footing.
Last week President Obama accused Congress of not taking this issue seriously, yet later the same day he dismissed a request from Senate minority leader Mitch McConnell to meet. Today the President is expected to accept Sen. McConnell's request and begin discussions. Rather than continue to kick the can down the road, we need Congress and the President to discuss serious options to dig our country out of this financial mess. Representative Paul Ryan, (WI-R), as Chair of the House Budget Committee, has put forth a serious budget proposal to cut back spending, reform entitlements and pay down the deficit. He discusses one of the most difficult but necessary reforms in the second Path to Prosperity video.
There are many possible options to solving the debt crisis in our country, but at present only the Republican leadership appears to be proposing serious solutions to the impending crisis. Citizens of our nation need both sides and the President to come together with specific proposals, credible alternatives and the willingness for the government to adopt some of this "shared sacrifice" being discussed.