Mr. President, I stand today to urge my colleagues to support one of the most important pieces of legislation that has come before this body in decades: Senate joint resolution 10, the Hatch-Lee Balanced Budget Amendment Balanced Budget Amendment proposal.
The reason why I insist this is so important is because of a crisis that we're facing today. We've accumulated about $15 trillion in sovereign debt on behalf of the united states. $15 trillion. It works out to about $50,000 for every man, woman and child in America. This is an amount of money that could represent an expensive car. It could represent a college education. It could represent all kinds of things but it represents ultimately debt that Congress has incurred that Congress can't afford to continue to incur at this same rate which we're doing every day.
We're adding to that debt at an unsustainable rate of about $1.5 trillion every single year. Here's why that's so distressing to me. As the White House itself has acknowledged just a few months ago, we're now within about a decade, perhaps much less, of owing about a trillion dollars a year just in interest on our national debt. Currently we're paying a little over $200 billion a year in interest. By the end of this decade, that number is likely to rise to an astounding $1 trillion a year.
We could reach that number much sooner than that. It could happen perhaps in half that amount of time if interest rates suddenly start to climb, as they easily could do, particularly given the fact that we're about 350 basis points below the historical average for yield rates on U. S. Treasury instruments, the means by which our governmental debt is financed.
We have to get this problem under control now, because if we wait until then, until we have to pay a trillion dollars a year just in interest on our martial debt, it will be too late to do anything. By waiting, by postponing the day of our accountability, we will have made a choice, a devastating choice that will prove the signal, the downfall of the greatest economy the world has ever known. We can't allow that to happen. Not now, not on our watch, not when the stakes are this high.
If we have to make up that difference, the difference between the $200 billion a year that we're paying now and the trillion dollars a year that we'll have to be paying in interest on our national debt just a few years ago, that money has to come from somewhere. That money isn't something we can expect simply to obtain through an increase in taxation.
Over the long haul, we've learned that our tax system is capable of generating a revenue stream equaling a little over 18% of all the revenue that moves through the American economy every single year. A little over 18% of our gross domestic product.
As this chart shows, that percentage remains relatively constant. It's remained that way for many decades, going back to at least 1960. It averages out a little over 18% of gross domestic product.
Now, that remains true even when we go back 30 years or so, when our top marginal income tax rates were approaching 90%. The economy finds a way to produce no more than a little over 18% of GDP.
So we can't just raise taxes at that point in order to generate more revenue because our income tax system, no matter how we tweak it, no matter how high we raise top marginal rates, isn't capable of generating that much revenue. What we do when we simply ratchet up those tax rates, if anything, is we shrink the size of our economy, we chill economic growth to the point where we're actually generating less revenue, not more.
So we can't just tax our way out of that problem, nor can we, at that point, simply borrow our way out of that problem. In other words, we can't just borrow an additional $800 billion a year on top of the present day $1.5 trillion a year that we're borrowing. Because if we did that, our interest rates would go up that much more. That would make our decision that much more crippling on our economy.
There are a lot of reasons why this matters. My colleague from Ohio, Mr. Portman, acknowledged just a few minutes ago that this chills job growth when we have this much debt. It's also true that this chills, this impairs our ability to fund every conceivable government program, from defense to entitlements, such that if we wait in order to make the necessary changes to the way we spend money in Washington, we will wait at our own peril, we will wait at the peril of those who have become dependent on those very government programs that will have to have their budgets slashed immediately, abruptly, severely. We can't afford to do that.
Those who have become dependent on Social Security, on Medicare, on Medicaid, on other entitlement programs, on supplemental nutritional assistance, would be devastated if all of a sudden we cut off funding for those programs or we had to slash those budgets by 30%, 40%, 50% overnight. It's these abrupt changes that prove more difficult for our economy to absorb.
I've often said that it's something that we can analogize to being on top of a large building. Let's say our $15 trillion debt can be compared to a 15-story building. If you need to get down off of that building, you need to get to the ground floor, if you want to do it really quickly, you could decide to jump. If you decide to jump, it's not the fall that will kill you, it's the abrupt halt at the end of that fall. So you need to do something to cushion the fall, to slow it down a little bit so that it can be accomplished gradually, so that nobody gets hurt.
That's where the Balanced Budget Amendment comes in. The Hatch-Lee Balanced Budget Amendment, Senate joint resolution 10, would bring about significant systemic changes but it would do so gradually so that the cuts, while significant over the long haul, are not abrupt, so that the impact isn't severe other than avoiding the severeness of the impact that would otherwise occur.
We have to get down from that 15-story building, from that $15 trillion debt. We do that through a Balanced Budget Amendment, one like Senate joint resolution 10, which contains a five-year delayed implementation clause. That would give us time to work out a phased-in glide path toward balancing our budget.
That's what we need to do in order to protect and preserve our economic stability, our jobs market, and our ability within the federal government to fund everything from defense to entitlements.
Those who ignore the need for this amendment ignore the fact that our spending continues to escalate. I want to talk about how much we've spent as a country as a percentage of our overall economy, as a percentage of our gross domestic product.
Between the early 1790's and the early 1930's, the federal government spent on average between 2% and 4% of gross domestic product every single year with only two notable exceptions -- once during the civil war and a second time during and in the immediate aftermath of World War I. With those two exceptions, Congress's spending was modest, between 2% and 4% of GDP.
That all started to change in the early 1930's when we reached the double digits during peacetime for the first time in our history. We've, unfortunately, never really retreated from that cycle. Federal spending today as a percentage of GDP stands close to 25%, meaning that for every dollar that moves through the American economy, a quarter of that goes to Washington, is sucked in by the federal government and can't move on to help continue to stimulate the economy.
That pattern of increased federal spending as a percentage of GDP is expected to increase in the next few years. It's expected, based on data provided by the Congressional Budget Office, to reach 26.4% of GDP within the next ten years, by 2021.
Some say that that figure is too optimistic and that it could actually be much higher than that, it could, in fact, be significantly higher than 30%. At a minimum, we know that it will be 26.4% or more unless we take pretty significant steps to control our spending.
And so I find it interesting that many are saying that we don't need to make changes, that we can somehow just have Congress just do its job, that Congress just needs to follow the Constitution and do its job and just balance its budget.
Well, let me tell you the problem with that. First of all, there's nothing currently in the Constitution that restricts Congress's power to borrow money. Clause 2 of Article 1 of the Constitution gives us the power to do that. And we've done it. We've done it again and again and again. We've done it so many times in recent years that we've almost lost track.
Now, Congress first placed a statutory limit on the acquisition of new federal debt in 1917, which was the second Liberty Bond Act. Since 1962, Congress has altered the debt limit through 74 separate measures and has raised it ten times just since 2001, just in the last ten years.
Since 1990, the debt limit has been raised by a total of $10.1 trillion. Nearly half of that increase has occurred just in the last four years, since late 2007. So this is not a situation in which we're just seeing the normal growth of government spending, either in normal numbers, in numbers adjusted for inflation, in numbers measured as a percentage of GDP. By any metric, the amount of federal spending and the amount of debt acquisition has grown exponentially, giving us this hockey stick-like curve in the acquisition of federal debt. We can't continue this practice.
We especially can't continue it given the fact that we know that the natural limit on our ability to receive revenue through the income tax system is a little over 18% of GDP. So we have to have something in place that keeps us from spending more than we take in.
That can't possibly be accomplished, in my opinion, without something that ups the ante, something that make it structurally more difficult on a permanent basis for Congress to engage in deficit spending. And to spend more than 18% of GDP.
There are a few critical features in the Hatch-Lee Balanced Budget Amendment proposal that I think any viable Balanced Budget Amendment proposal ought to have.
First, it needs to apply to all spending.
Second, it needs to cap spending at 18% of GDP.
It also needs to require a supermajority vote in order to exceed that percentage of GDP Spending limit, in order to raise taxes or in order to raise the debt limit.
Without these kinds of provisions, this kind of redundant protection against the inexorable growth of federal spending generally and the in inexorable growth of deficit spending in particular, our debt will crush the very programs that we purport to be protecting.
Those who have fought against this say well, we can't limit spending to 18% of GDP or else we will hurt program x., y, or z. While they are making this argument, they are making it in reckless disregard of the fact that those same programs will be jeopardized if we continue to borrow recklessly without any structural spending restraint or reform on the horizon.
Others have argued that we don't need this because somehow it's unenforceable. I'm not quite sure what they mean. Perhaps they don't know what a court would do with it, but they are forgetting the fact that we have other provisions in the Constitution that raise the vote threshold, which is essentially what the Hatch-Lee Balanced Budget Amendment does. In other words, we have other provisions in the Constitution, provisions that are followed routinely, without the need for litigation, just based on members of Congress taking an oath to uphold the Constitution, as all of us are hired to do pursuant to Article 6.
Those are complied with every day. For instance, we all know and none of us really will dispute the fact that it takes a two-thirds supermajority vote in both houses of Congress to override a presidential veto. It takes a two-thirds supermajority vote in both houses of Congress to propose a Constitutional amendment. It takes a two-thirds supermajority vote in the United States Senate to ratify a treaty. We don't dispute the fact that these vote thresholds exist. We don't have to wait for the courts to intervene or for them to enforce them within Congress. We just follow them.
That's what this would do. This says that because Congress has the ability to destroy itself, to destroy the economy, to destroy the very government that we have created through reckless, indefinite, perpetual deficit spending, we must protect Congress from itself. Perhaps better said, we must protect people from Congress by requiring that Congress approve any amount of money spent in excess of what Congress brings in or in excess of 18% of GDP or in excess of the debt limit by a supermajority vote. We have to have that. It will be followed and it's absolutely necessary.
Now, it's interesting. Few, if any, of my colleagues will dispute the fact that Congress should balance its budget. There is perhaps a difference of opinion, maybe even widespread difference of opinion, as to how best we should try to close this gap, as to how best we should close the gap between the money that Congress brings in each year through the tax system and the money that it spends. There is widespread dispute about where cuts need to be made, but I think all of us agree that we do need to balance our budget.
That begs the question if we all agree, as I think we all do, then why can't we agree that we need to adopt a permanent structural mechanism that will be embodied in the Constitution that will ensure that that actually happens.
This proposal remains agnostic as to where cuts will be made. All it says is that if you're going to spend more than you take in or spend more than 18% of GDP or raise taxes or raise the debt limit, you're going to do it by a supermajority vote.
That's something that the American people support. In fact, 75% of the American people support these basic principles that Congress should not, for example, spend more than it takes in each and every year.
That brings me to the question of why it is that we should support Senate joint resolution 10, the Hatch-Lee Balanced Budget Amendment and not another proposal.
For example, Senate joint resolution 24. Senate joint resolution 24, which I might refer to alternatively as the Trojan horse Balanced Budget Amendment or as the do-nothing amendment proposal, purports to be a solution when, in fact, it is not, for one simple reason -- it gives Congress unfettered discretion to exempt itself out of the budget balancing requirement that it contains.
This would in effect, I am certain, render this amendment, were it to take effect, virtually dead letter provision. We have seen what Congress does when it has the option of simply exempting itself out of statutory spending caps, in the PAYGO rules, in the Gramm-Rudman-Hollings Deficit Control Act and in other statutory provisions like this. Congress giveth and Congress taketh away.
Congress has become a walking, breathing waiver unto itself, and when Congress is given the option of saying ‘I know we're supposed to balance our budget but we don't feel like it today’, it ends up not doing that.
All Congress would have to do under Senate joint resolution 24, under the do-nothing amendment proposal, is simply acknowledge that the United States is involved in a military conflict, and by simple majority vote it can exempt itself out of these provisions entirely.
By contrast, the Hatch-Lee Balanced Budget Amendment proposal acknowledges that in time of war or armed military conflict, it may be necessary to spend more than we take in. But in the case of an armed military conflict not amounting to a war, it requires a 3/5 supermajority vote, and in either a war or another armed military conflict, it specifically provides that in that war or conflict any overage, any amount spend above and beyond what Congress brings in has to be limited to that required to prosecute that war or that military conflict effort. That's a huge difference.
You can't simply give Congress the option of complying with the Balanced Budget Amendment's provisions only when Congress feels like it. This is a little bit like telling an alcoholic you have got to give up drinking while leaving an open container of whiskey on the table and requiring that person to walk past that bottle or even carry it around with him every single day. It doesn't work. You have got to take it out of the house. You have certainly got to take it out of the possession of the recovering alcoholic.
This is the challenge of our time, to figure out how to prevent Congress' chronic abuse of its own borrowing authority from collapsing under its own weight and from bringing about the economic collapse of the United States of America.
We have to have these structural spending reform mechanisms because our government is run by imperfect people. Benjamin Franklin has often been quoted for the line that says “he will cheat without scruple who can without fear.” I think when looking at Congress today, he might say Congress will spend more money than it has whenever it possibly can, whenever it has the option of spending more.
As Madison said, “if men were angels, no government would be necessary, and if angels were to govern men, neither external nor internal controls on government would be necessary.”
We are, as human beings, not angels, and our government isn't run by angels either. This is why we need these structural, permanent spending reform mechanisms.
We cannot afford to accept a substitute here, a cheap imitation, a Trojan horse Balanced Budget Amendment like Senate joint resolution 24, because if we adopt something like that, we will create the illusion to the American people that we are actually undertaking efforts to control our out-of-control deficit spending problem when, in fact, we're doing nothing because it's always the case that we're involved in a military conflict somewhere.
Congress will always be able to muster a simple majority, saying we can't be expected to balance our budget right now because of that. We've got to draw that line in the sand. We've got to stand for those who support everything from defense to entitlements. We have got to stand up for our children and our grandchildren and those who will come after them, those who are not yet old enough to vote, those who have not yet been born, those whose parents have yet to meet.
Those people aren't here to vote against us as we spend their money. This is a particularly pernicious form of taxation without representation. We fought a war over two centuries ago over that pernicious practice and we won that war, and we shouldn't subject our children and their children and grandchildren after them to that same practice. This is contrary to liberty, it's contrary to economic prosperity, and we can't stand for it to occur anymore.
So we really have two choices. One choice involves supporting, passing and submitting to the states for ratification the Hatch-Lee Balanced Budget Amendment proposal, putting some permanent restraint at long last on Congress' self-destructive borrowing capacity.
The other option can take many forms. It can take the option of supporting Senate joint resolution 24 which doesn't solve the underlying problem or it can take the form of doing nothing at all.
You see, if we do nothing at all, we still made a choice, we have made a devastating choice, a choice that will inure to the detriment of the American people and of the federal programs that we all rely on, the federal programs that people rely on to keep them safe, to protect them from the ravages of nature, to protect them from the conditions of poverty that we seek to avoid in this country.
It is, after all, the objective of all of us to seek for a better, more prosperous, more safe country, but we jeopardize all of those interests the longer we allow this practice of perpetual deficit spending to continue.
At the end of the day, we have to face our own constituents, those who choose not to vote for the Hatch-Lee Balanced Budget Amendment will have to face their constituents and tell them why they were unwilling to stand for a proposition so basic as we should balance our budget.
There is no excuse based on the fact that we can't do this oversight because this has a delayed implementation clause. It won't take effect until five years after it's been ratified by the states. In the meantime, we will be able to set in motion a sequence of events, a series of implementing bills that will allow us to put ourselves on a smooth glide path toward balancing our budget. We'll be able to do that.
Those who vote against the Hatch-Lee Balanced Budget Amendment can't look their constituents in the eye and tell them they did everything they could do to get our out-of-control deficit spending habits under control.
I urge each and every one of my colleagues to do this, to do this for themselves, for the programs that they want to save, to do this for their children and grandchildren. Our prosperity, our success as Americans, our survival as a nation and the success of our government require nothing less. Thank you, Mr. President.