For the past two decades, Congress has failed to bring financial stability to the country. Year after year, lawmakers burn hard-earned US taxpayer dollars without charter, abusing the privilege to control federal government finances. Due to the deteriorating financial condition of our country, inflation and the burden of a staggering US$32 trillion in national debt, the US economic rating has been downgraded from AAA to AA+. This is the second downgrade in the economy in just over a decade.
The erosion of our country’s financial management can no longer be ignored. Though some fiscal hawks in the U.S. House of Representatives are fighting hard for budget reform in the fiscal year 2024 approval process, every lawmaker in Washington must face the sobering reality that the federal government is spending addicted. Time is up and they can no longer continue. If Americans are expected to stick to a monthly or yearly budget to stay out of debt, why can’t Congress do it?
So how is the country’s economic downturn affecting every American? Interest rates are currently at an uncomfortably high level and this decision will continue to raise those rates. Additionally, much like a person with bad credit who wants to buy a home or take out a personal loan, lenders will be reluctant to approve such an application. If the loan application is approved, it may involve paying a higher interest rate on the loan. If the federal government had to pay higher interest rates on its debt, Congress would likely have to impose higher taxes and Americans would have less money to put back into the economy, resulting in slower economic growth. As a result, goods and services will disappear, which inevitably leads to a decline in living standards.
The current economic difficulties the European Union is struggling with are an example of what the US may experience in the near future. In recent years, Europeans have been consuming less, causing their economy to slow down. This is due to various factors: an aging population, reduced incentives to work harder to get ahead, etc. Due to inflation caused by COVID-19 and the war in Eastern Europe, food prices have skyrocketed and Europeans are having cutbacks on certain foods made necessities just to get by. In addition, wages have fallen by at least 3 percent in most European countries. Compared to other “wealthy” countries, taxes in Europe are already higher and are estimated to be around 40 percent of their GDP. Does this all sound similar to what the US has struggled with in recent years?
As depressing as that sounds, the United States economy is stronger today. However, Europe’s economic decline is a foretaste of where the US will go if the financial ship is not fixed. This stark warning should motivate Americans to stand up for fiscal responsibility from the federal government and hold it accountable for unnecessary spending.
What can Congress do to get us out of this dire financial situation? The simple answer is to curb runaway federal spending. Fundamental steps towards fiscal responsibility need to be taken before we can tackle certain types of reforms that should be undertaken. And if we are to successfully return to a financially secure path, the elephant in the room that neither party wants to acknowledge needs to be addressed: entitlement spending reform.
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In fiscal 2022, the federal government spent $1.19 trillion on more than 80 different social programs. President Biden’s proposed budget for the coming fiscal year includes spending over $2.6 trillion on new entitlement programs. That is absurd. Over $2 trillion for entitlement programs alone is unreasonable.
If we refuse to tackle the country’s dangerous fiscal trajectory, the outlook for the US economy is bleak. Businesses will relocate to more stable economies, causing our markets to become uncompetitive. People will stop moving here because there are fewer jobs. Wages will fall and Americans will have no chance of getting ahead. But the most sobering reality is that the American Dream is dying. The idea that people can come to America to have a better life with more freedom and freedom and to do whatever they want will no longer exist. Would you like this for your children, grandchildren or great-grandchildren?
Adam Brandon is the President of FreedomWorks.
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