Chairman Hensarling: ‘Unsustainable Levels of Debt Are Harming Our Country Today’
‘As a veteran of the Super Committee, Simpson-Bowles, and now chair of this committee, my laptop is regrettably full of reports describing our debt as unsustainable. Yet denial, justification and inaction continue to rule the day.’
March 25, 2014 -
Financial Services Committee Chairman Jeb Hensarling (R-TX) today delivered the following opening statement at the committee’s hearing on the threat posed by America’s rising national debt. Today’s hearing is the first in a series of hearings the committee has planned to focus attention on the impact the nation’s debt has on economic growth, jobs, national security, and the federal government’s ability to fund discretionary spending and entitlement programs:
Recently, I saw in the newspaper a headline that read, “Debts, deficits - once a focus – fade from agenda.” Shame on us if we allow that headline to prove accurate. In the last six years we’ve accumulated more national debt than we did in our nation’s first 200 years. We’re experiencing debt to GDP ratios not seen since the aftermath of World War II. That level of debt was episodic and temporary; today’s is structural and unsustainable. As a veteran of the Super Committee, Simpson-Bowles, and now chair of this committee, my laptop is regrettably full of reports describing our debt as “unsustainable.” Yet denial, justification and inaction continue to rule the day.
We’ve had many sobering warnings that our nation is headed for a crisis. Renowned Economics writer Robert Samuelson has written that our failure to deal with the problem could “trigger an economic and political death spiral.” Erskine Bowles, Co-Chairman of President Obama’s Fiscal Commission said, “This debt is like a cancer… It is truly going to destroy the country from within.”
We need not look much further than Detroit or Greece to see just how hurtful and harmful a debt crisis can be.
In Greece, according to the latest official report, the unemployment rate is almost 30 percent. With unemployment so high, according to press reports, many college graduates have had to turn to subsistence farming in the country. Closer to home, a report from Detroit last year indicated approximately 40 percent of the city’s street lights did not function; only one-third of the city’s ambulances were working; and there were approximately 78,000 buildings that were vacant.
Will our nation as a whole ever experience a debt crisis comparable to Detroit and Greece? I do not believe so, but I do not know so. And I am greatly troubled by the fact that there are few instances in world history of republics existing beyond 200 years, and almost all met their demise through some type of fiscal crisis. But unsustainable levels of debt are not just the stuff of apocalyptic nightmares for some yet to be born and unknown future generation of Americans. No, unsustainable levels of debt are harming our country today as we speak.
Just look at our lackluster economy. Bernie Marcus, former Chairman & CEO Home Depot, spoke for many job creators when he said, “If we don't lower spending and if we don't deal with paying down the debt, we are going to have to raise taxes. Even brain-dead economists understand that when you raise taxes, you cost jobs.” Small business owners all over America feel likewise. As one of them told me, “Jeb, I know somehow, someway I'm going to have to pay for all this debt. So now is not the time I'm going to take the risk of buying new equipment or hiring a bunch of folks.” The national debt is clearly keeping people unemployed and underemployed.
It is estimated we will spend $233 billion this year on interest payments alone. That $233 billion is more than seven times larger than the requested annual budget for the National Institutes of Health. Let us reflect upon all the childhood cancer studies going unfunded today because of our national debt. Regrettably, the situation will get worse. The Congressional Budget Office projects as much as $630 billion a year of additional interest payments over the next ten years that could be added to interest on the debt. Interest payments on the debt are cannibalizing our discretionary budget, including national defense.
As interest rates rise, it’s not just the federal budget that will be squeezed; it will be the family budget as well. Especially as more federal borrowing crowds out private borrowing on everything from credit cards to mortgages to student loans. In short, it has an adverse impact on almost every issue within this committee’s jurisdiction.
That is why as Chairman I am launching a series of hearings to be focused on the pending debt crisis.
There is much at stake. We can no longer allow the debt deniers among us to mask the threat or change the subject. I believe any reasonable examination of history and economics will show that we are indeed headed for a debt crisis. It is the most foreseeable crisis in our nation’s history. As members of the House of Representatives, we can disagree about the solutions to avert the crisis, but we should unanimously agree that debt matters and debt matters today.