Nick Smith, May 23, 2004

The federal government is now running the largest budget deficit in our history, which is estimated to be $638 billion for the current fiscal year. We will soon have to increase the $7.384 trillion statutory debt limit in order to accommodate this borrowing, which our children and grandchildren will ultimately have to finance. The House of Representatives passed a budget conference report on May 19 and it now goes before the Senate. The budget is a mixed bag, but I voted for it because it is the best we’ve done holding the line on spending in six years and because passing a budget allows us to pass some bills in the Senate with 51 votes instead of 60.

Between 1995 and 2000, Congress exercised a small amount of spending restraint in the face of what were record deficits. Spending growth over this period was held to only slightly more than inflation. Robust economic growth did the rest, producing the first budget surpluses in three decades between 1998 and 2001. (I still consider the government in deficit during that time because we were still borrowing from government trust funds.) Federal spending fell from 20.7% of gross domestic product (GDP) in 1995 to 18.4% in 2000.

Once the budget was balanced, however, the very little bit of fiscal discipline that Congress had collapsed entirely. The big spenders, many of them in the Senate, pointed to the so-called surpluses as a reason to create and expand government programs. Between 2001 and 2005, government spending has increased by a whopping 29%. Fiscal years 2002, 2003, and 2004 were three of the five largest increases in discretionary spending over the last four decades. Total spending rose more than 8% in each of those years. While defense and homeland security needs contributed to that increase, we should have done much better. In fact, the Republican Study Committee calculates that 55% of the new spending fell outside defense and homeland security.

The budget passed in the House holds total spending to an increase of 3%. That is much better than recent years, but still nearly twice the rate of inflation. Without a budget, however, there is no way to put limits on the appropriations process at all. In an election year, that would likely lead to even higher spending.

Several Republican Senators oppose the budget conference report because of its application of so-called PAYGO rules to tax cuts, endangering its passage in that body. They oppose the budget because it allows Congress to make some of the expiring provisions of the 2001 tax cut permanent without having to cut spending to pay for it. I think that we can and should find ways to make these cuts. And if we can’t do that, maybe we shouldn’t add to the heavy burden of debt we’ve already placed on future generations.

All in all, passing the budget was better than defeating it. But it was a close call for me because it represents only very limited progress. With the bottom half of the adult population paying just 1% of income taxes and with many of those people calling for more government services, we are sliding toward socialism and crushing debt. With interest rates set to rise, we will likely see interest payments take up a larger and larger portion of the budget. If we do not act soon to fix our growing budget problems, we will leave future generations with far fewer opportunities than we had.

Congressman Nick Smith, a Republican, represents Michigan's 7th Congressional District, which includes Battle Creek and the counties of Branch, Eaton, Hillsdale, Jackson, Lenawee, Calhoun, and Washtenaw in south-central Michigan.