Nick Smith, February 15, 2004

This week, we celebrated Abraham Lincoln’s 195th birthday. In his famous address at Gettysburg, he noted that "our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal." The Civil War was "testing whether that nation or any nation so conceived and so dedicated can long endure."

Today, we face a threat to the country that may well be as serious. It lies not in a dramatic clash of arms, but in neglect of the nation’s finances, especially our long-term finances. Voters vote for benefits, and politicians promise them without knowing how to pay for them. Just three months ago, Congress voted for a prescription drug benefit that adds $7 trillion to the program’s unfunded liability. That’s equivalent to our nation’s entire national debt. This kind of spending means that higher taxes are coming. Maybe not in the next year or two, but eventually.

The Republican conference held a meeting on February 11 where there were many members pushing not only to adhere to the spending restraints proposed by the President, but to go beyond them. I’m also confident that the discretionary spending caps which were in effect from the early-1980s through the surplus period of the late-1990s will be reinstated. It is important that Congress work hard to cut out unnecessary waste and abuse. We also need to make hard decisions to prioritize programs, reduce spending on some and eliminate others.

Just as important as controlling the deficit over the next few years is grappling with our long-term budget problems. Another aspect of the solution is improving the honesty of government accounting. I have a bill to require CBO and OMB to include unfunded liabilities in their budget projections. This would help focus attention on the long-term costs of our entitlement programs, which Kent Smetters and Jagdessh Gokhale recently calculated at $44 trillion. To put that in perspective, that amounts to four years of GDP and more than 18 times the President’s proposed budget for this year.

Some people have said that we shouldn’t worry so much about the unfunded liability because it can be wiped out by reforms. But Congress hasn’t shown enough political will to deal with the problem. Perhaps making it more visible will help build pressure for reform. Also, I feel that improving government accounting will make reform easier, because it will be possible to point to improvements in our unfunded liabilities that the government is not reporting now.

Congress and the President can redeem their record on spending to a large degree if they push hard for Social Security next year. It will be a fight because steeply progressive taxes and big government have combined to form a powerful electoral bloc. The bottom 50% of earners now pay virtually no income tax, and therefore have virtually no incentive to restrain government. As with health care, we need co-pays so the average person bears some of the cost for government. I’m hopeful that we can bring the unfunded liability problem to the attention of the public. As citizens understand its consequences, we will be able to push for a more responsible and less spendthrift government and have greater assurance that our form of government will endure.

Congressman Nick Smith, a Republican, represents Michigan's 7th Congressional District in the U.S. House of Representatives.