Jon Kyl, November 9, 2009

The Congressional Budget Office recently reported that the federal budget deficit hit an astonishing $1.4 trillion for the fiscal year that ended on September 30, 2009. In other words, in just the last year, the federal government spent $1.4 trillion -- or a whopping 40 percent -- more than it collected in taxes.

The government doesn’t just print extra money to cover that shortfall. If it did, we would be suffering rates of inflation beyond most of our imaginations. So it has to borrow the money -- from savers, investors, pension plans, and even foreign governments, like China. And as any borrower must do, it must pay interest on that debt, an estimated $253 billion in interest payments this year alone. That’s about seven percent of the entire budget.

We have no choice but to pay that interest or lenders will stop providing the money our government needs to pay its bills, whether for health care, education, environmental protection, defense, or law enforcement.

If the government prudently manages public finances, paying those interest costs is not an undue problem. Just as a family can afford the interest on a mortgage if it keeps other debts under control, so too can the federal government afford to make relatively reasonable interest payments. The problem is, the deficit under President Obama has nearly tripled in just one year, and his budget proposes an explosion of debt in years to come. Under his budget, the debt will double in five years and triple in 10. There will be more debt accumulated under this one ten-year budget than during the entire history of the United States from 1789 to 2008. This means ever higher interest payments.

Whereas interest on the national debt amounts to about $253 billion this year, the rapidly rising debt will mean that interest payments will double in just two years, to an estimated $477 billion. In 10 years, they’ll amount to more than $800 billion. That’s in a single year. By then, interest will become the largest single item in the federal budget.

Until now, the rising debt has not had an impact that could be discerned by most Americans. The economy has grown at a rate sufficient to service that debt without requiring significant new taxes or spending cuts. But the spending spree being unleashed by the Obama administration -- resulting in $1 trillion annual deficits for years to come -- will change all of that.

What does that mean for the average American family? It means that Congress and the President could either impose crushing new taxes to pay rising interest payments, drastically cut federal spending on domestic programs and national defense, or borrow even more (though that would simply add to the debt and lead to even higher interest costs). Each of these options means that American families can expect a lower standard of living and less back from their government every year. Less of every dollar of tax that they pay will be available to pay for Social Security, Medicare, education, veteran’s services, nutrition aid, defense, and unemployment assistance, while more of every dollar will go just to pay interest on the national debt, and much of that will end up in the hands of foreign lenders.

Unless Americans are willing to work harder and harder for less and less -- and I doubt they are -- we’ve got to reduce deficit spending to manageable levels and ultimately learn to live within our means, and the sooner the better. Otherwise, today’s spending spree is destined to leave less for tomorrow. That means a lower standard of living for us and our children and grandchildren. I am not proud that this is what we have done for future generations.

Senator Jon Kyl, a Republican, represents Arizona in the U.S. Senate. He serves on the Senate Judiciary Committee, the Finance Committee, and the Energy and Natural Resources Committee.