Republicans’ Balanced Budget

• Republicans will produce a balanced budget to bring an end to the Obama-era record deficits (on average, more than $1 trillion annually) and ever-increasing debt (now over $18 trillion).

• Balancing the budget leads to more private investment and job growth.

• High debt levels subject our economy to foreign borrowing and hurts the U.S. economy.

Senate Budget Committee Chairman Enzi will propose a budget resolution that would balance by the end of the 10-year budget window. For six years, President Obama has taken a pass on long-term budget accountability. He even expanded the problem with Obamacare, which the Republican budget addresses through reconciliation instructions. It is now up to the Republican Congress to take a responsible route to fiscal sanity.

The only significant deficit reduction efforts President Obama has signed into law were the discretionary spending caps and the relatively small mandatory sequester in the Budget Control Act. He only took that step because it was forced on him by congressional Republicans. Washington’s debt has grown to more than $18 trillion since President Obama took office – that’s an increase of more than $7.5 trillion since he’s been in office. It is expected to reach nearly $27 trillion in the next 10 years if we leave the budget on autopilot.

The Longer We Wait, the Worse It Gets

Last summer, CBO ran long-term simulations of deficit reduction over the next 10 years. It found that deficit reduction leads to more economic growth. Under the baseline scenario, CBO projected Gross National Product per person of $76,000 in the year 2039. Under an alternative scenario with even higher debt, this number decreased to $73,000. In contrast, if we could reduce the deficit by $2 trillion over the next decade, GNP per person would be $78,000. Deficit reduction of $4 trillion would raise the number to $80,000.

The budget will need to be reined in eventually. The longer we wait, the larger the savings we will need to stabilize our situation. CBO estimates that in order to keep publicly held debt stable at its current level of 74 percent of the economy through 2039, we need to reduce the deficit by 1.2 percent of GDP every single year between now and then. That would mean $212 billion in deficit reduction every year if we start today. If we wait until 2020 to make any changes, we would need to cut 1.5 percent of the economy per year – $266 billion in today’s dollars. If we wait until 2025 to make any changes, the necessary cuts jump to 2.1 percent of GDP per year. In 2015 dollars, that would mean $372 billion per year.

Trying to reduce the debt to its 40-year average of 39 percent of GDP would be even harder. That would require $460 billion in annual cuts starting this year. If we wait until 2025 to start making the cuts, it would take a gigantic $761 billion per year – nearly 20 percent of the current federal budget.

Meanwhile, interest costs will continue to rise, and continue to waste tax dollars that America should be spending on more important things. Defending our nation is one of the federal government’s top priorities. The cost of servicing Washington’s debt will soon overtake the entire Department of Defense budget if we do not implement reforms. Under CBO’s baseline, interest costs will exceed the Pentagon’s budget in 2023. By then, net interest costs are projected to total $704 billion, and defense spending is estimated at $696 billion.

Spending Should Be the Focus for a Balanced Budget

Spending is at historically high levels, and Democrats have put us on a path for it to keep rising in the future. According to CBO, federal spending over the 50 years from 1965 to 2014 averaged 20.1 percent of GDP. This year it will be 20.4 percent. A decade from now, spending will rise to 22.1 percent. That’s the equivalent of spending an extra $350 billion more than the average – in that one year alone.

In contrast, revenues averaged 17.4 percent over the past 50 years. CBO assumes that revenues will average 18.2 percent of GDP over the next 10 years. That’s probably an unrealistic number, since the U.S. has only seen revenue reach that level 12 times in the last 50 years. The president’s budget was even more optimistic, expecting revenue to average 19 percent over the next decade, even though we have only hit that target five times in 50 years.

Some of Washington’s spending benefits future generations – such as investments in infrastructure, medical research, and maintaining our freedom. In contrast, Washington’s recent out of control spending has actually harmed the economy future generations will inherit. The debt will crowd out private investment and lower economic growth and productivity. If Congress does not act now, this economic burden will pass to future generations. Our children and grandchildren could not consent to the past spending, but they will soon be passed the bill.