All 47 Senate Republicans today announced their support for a Balanced Budget Amendment.The proposal has been previously supported by the parent organization of this website, Americans for Limited Government.
ALG President Bill Wilson urged speedy adoption of the amendment before “a catastrophic default on the $14.2 trillion national debt and the collapse of the dollar as the world’s reserve currency.”
“If something is not done to bring the nation’s fiscal house into order, soon the debt will become too large to even refinance, let alone be repaid,” Wilson wrote in his letter to U.S. Senators.
Senate Republicans announced their amendment to the public at 3:30PM today.
Wilson noted that total interest payments on the debt were already spiraling out of control, reaching $413 billion in 2010 and rising to $430.4 billion in 2011. “Moody’s has warned that when interest owed on the debt reaches 18 to 20 percent of revenue, the nation’s gold-plated Triple-A credit rating will be downgraded. The trouble is that the Office of Management and Budget projects total interest owed for 2011 to be $430.4 billion, which is already 19.79 percent of the projected $2.174 trillion of revenue,” Wilson wrote.
“The total interest is a real obligation that requires real borrowing to meet, and cannot be readily discounted as revenue to the entitlement programs when it is in fact a liability to taxpayers,” Wilson warned, alluding to an accounting trick by the federal government to hide the nation’s total interest obligations by subtracting interest paid to the Social Security and Medicare trust funds from the total figure.
Wilson warned that the government was currently meeting its obligations by relying on the Federal Reserve to increase its U.S. debt holdings, which will rise to $1.5 trillion by June. Currently, the Fed is the largest lender to the U.S. in the world, more than China or Japan.
“Printing money to refinance the debt cannot continue for long without very severe consequences, including a potential collapse of the dollar as the world’s reserve currency, hyperinflation, and a complete default on the nation’s obligations,” Wilson cautioned.
Wilson warned that American citizens may not be fully aware of the dangers posed by the spiraling increase of the debt. “The American people must be advised of these cataclysmic risks of inaction. There is a very dangerous misconception that the nation can just continue borrowing and printing money perpetually. It cannot. Nor will it long endure as the world’s foremost economic and military superpower if it tries to.”
Wilson continued, “Besides a failure to meet our fiscal obligations, a national default will mean that the U.S. will be unable to meet its security obligations around the world, destabilizing whole regions, and threatening national security.” He pointed to Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, who has described the debt as the single biggest threat to national security.
ALG urged Senate Republicans to condition their support of an increase in the $14.294 trillion national debt ceiling to passage of the Balanced Budget Amendment, and to take their case directly to the American people. “If you will take a courageous stand to save this nation from certain ruin, the American people will surely stand with you,” Wilson concluded.
Also Read:
ALG Letter to Senate Endorsing Balanced Budget Amendment, March 31st, 2011.
Sen. Orrin Hatch Introduces A Balanced Budget Amendment, Video, Americans for Limited Government, March 31st, 2011.
Senate Proposal to Balance the Budget, March 25th, 2011.
One page fact sheet on Balanced Budget Amendment, March 25th, 2011.
