EDITORIAL: Next president must balance the budget — fast
Presidential candidates are visiting Nevada with increasing frequency, seeking voter support for February's first-in-the-West caucuses. They're promising a lot, but in making their campaign pledges, two words aren't said nearly enough: balanced budget.
The Review-Journal is publishing a 10-editorial series on policies and government reforms candidates in both major parties should be able to get behind. The sixth policy goal we'd like presidential candidates to champion: a balanced federal budget.
Don't laugh. In the late 1990s, Democratic President Bill Clinton and a Republican Congress balanced the federal budget and — gasp! — actually started paying down the national debt. Then the dot-com bubble burst, 9/11 started the global war on terror and the housing collapse triggered the Great Recession. Ever since, Washington has been spending more money than it takes in.
Every budget deficit requires massive borrowing to fund federal operations, which increases the national debt. The national debt doubled under Republican President George W. Bush to about $10 trillion. By the time Democratic President Barack Obama leaves office in January 2017, the debt will have doubled again to roughly $20 trillion. Yes, the budget deficit is decreasing thanks to the sequester — the Congressional Budget Office reports the deficit for the fiscal year that ended Sept. 30 was $435 billion, a fraction of the trillion-dollar-plus deficits of Mr. Obama's first term. But no candidate to succeed Mr. Obama appears to have a credible plan to quickly eliminate that deficit. Democrats want more domestic/social spending while Republicans want more military spending. And the only way to stop the growth of the national debt is stop borrowing to fund Washington.
Today the national debt exceeds 100 percent of gross domestic product. The primary reason that figure isn't higher: today's rock-bottom interest rates, which allow the government to spend just $220 billion from its nearly $4 trillion budget on debt service. But economists predict interest rates will gradually rise in the years ahead, which means debt service will consume more and more of the debt-funded budget. In fact, the CBO predicts higher interest rates and even more deficit spending in the decade ahead will leave Washington with $800 billion in annual debt service obligations by 2025, an amount that will approach all federal discretionary spending combined. By then, a government notoriously scared of making hard decisions will have to make impossible calls to retain market confidence in the country's ability to make good on its obligations. The alternative? See Greece.
The last time Washington managed to balance the budget, the economy was growing rapidly, military spending was restrained and major government reforms were enacted. It's a sound recipe for today.
