We’ll Pay Price for Spending Excesses

Feb 23, 2009

We’ll Pay Price for Spending Excesses
By U.S. Rep. Joe Wilson (SC-02)
Guest Columnist, Beaufort Gazette

Americans are facing mounting job losses, depletion in their retirement accounts, and a large number of home foreclosures that sit at the heart of this economic crisis.  No one refutes the seriousness of the situation we face, and few if any have advocated that we simply do nothing.  However, in the name of urgency, decisions were made in Washington without transparency or a complete disclosure of their consequences.  Left unaddressed, the type of borrowing and spending mandated by the $787 billion spending bill could ultimately do more harm than good.  It could spawn a new wave of inflation, higher interest rates, and higher taxes.

During a recession, it is convenient to ignore the inflationary consequences of borrowing and printing money.  However, the market does take notice.  The inflation fed by this type of action can come back to haunt our economy and damage not only America’s global financial standing but the paychecks and retirement savings of every American.  Concern for inflation has been publicly buried under the economic models touted by those in support of the recent spending bill.  They assume that government must spend obscene amounts of money to get our economy out of a recession.  They have extended that philosophy so that Congress can spend money on anything and assume, by virtue of pushing dollars – borrowed and newly printed – out the door, the economy will recover.  This is why the spending bill crafted by the House and Senate Democrat leadership consisted of so many non-stimulus items.  It did not matter where the money went as long as it went somewhere.  Sadly, very little of it will go back into the pockets of American taxpayers.

Unchecked government borrowing and spending will lead to a decline in global confidence in our currency while also inviting the prospect of higher interest rates into the economic mess.  When the cost of borrowing capital becomes prohibitive, it can diminish what if any positive effect billions in government spending had on jumpstarting growth.  It depletes the power of our private sector which historically has made America a safe bet for nations willing to buy our debt and fund our deficit spending.

When government is unwilling or unable to borrow from other nations to fund more and more spending, it turns to American taxpayers to foot the bill.  Raising taxes would only frustrate this economy and negatively impact any positive progress made in the coming years.  Nevertheless, without Congressional action, tax increases will occur in 2010.  These tax increases would harm American families and American businesses.  Moreover, the threat of future tax increases has a negative effect on economic growth in the near term.  It puts businesses on notice that the cost of growing and hiring new employees is going to increase.  That kind of weight against job creation is exactly the wrong thing for our struggling economy.

These consequences will fall into the laps of today’s generation and future generations if we choose to ignore them.  Those who supported alternative stimulus proposals – tax relief for American families and small businesses as well as plans to address the housing crisis without massive spending – want to see American families and American industry succeed.  So, we hope that this spending bill succeeds.  But we have our doubts.

In the meantime, we need to take the right steps to fix the economy and stem the tide of future inflation.  Permanent tax relief for individuals and businesses is a good place to start.  Above all, we need to make the tough but responsible decisions to stop runaway spending.

* Also published in the Island Packet under the title “Price to Pay for Spending Way Out of Recession.”