Warns of the threat the national debt poses to the economic wellbeing of the country
WASHINGTON—Today at a Budget Committee hearing to consider the nomination of Shalanda Young to be Director of the Office of Management and Budget, U.S. Senator Mitt Romney (R-UT) warned that deficit spending is a precursor to economic calamity and highlighted how the high rates of inflation Americans currently face is a result of Washington’s failure to address its spending problem. Romney also pushed for the Administration to make the national debt a priority—arguing that it should be an essential component of any strategy for the United States to compete with other nations and maintain its lead as a model of democracy around the world. Senator Romney’s bipartisan, bicameral TRUST Act would create a process to rein in the national debt and rescue endangered federal trust funds. Details on the TRUST Act can be found here.
After hearing that the DOT is making it more difficult for states to use funds from the bipartisan infrastructure bill for highway expansion, Senator Romney sought assurances from Acting Director Young that Utah would receive the funding it needs. Excerpts of his exchange with Acting Director Young can be found below and video can be found here.
Senator Romney: Ms. Young, as you probably know I was one of those that was part of the bipartisan negotiating team that put together the infrastructure bill, our largest single investment was in highways. You can imagine our surprise when we see the Department of Transportation indicating that the highway money can’t be used for increasing capacity of highways. This direction flies in the face of our intent and our needs. I recognize there are some states that aren’t growing and may not need additional capacity. New York, New Jersey, Delaware, Rhode Island and so forth. But there are other states that are growing fast; South Carolina, Florida—my state of Utah, the fastest growing state in the nation over the last decade. We need to increase the capacity in our highways or we’re going to not see the economic growth which we projected as being part of this bill. Could you please get back to me and other members of our bipartisan group on progress on this front and what the status will actually be?
Acting Director Young: Senator, the ranking member has brought this to my attention today. I will absolutely look into this and thank you for your work on that piece of legislation.
Senator Romney: I have a six-foot chart in my office that looks at—going back to 2000 BC—the coming and going of great civilizations over time, and there is a common characteristic of civilizations in decline and that ultimately collapse, and that is that they end up spending far more than they take in. They are able to do that because other nations see them as being strong, and loan money to them. They inevitably have a massive inflation in their economy, and by doing so they devalue their currency. At some point their currency ceases being the reserve currency of the world. It is a real concern for many of us to see us year after year spend more money than we take in, and it is a precursor of economic calamity.
Right now we’re seeing the economic impact being showered on the people of America that are suffering with very high rates of inflation. I was, frankly, alarmed that the numbers were not familiar to you and to your Deputy Director. The national debt is $29.9 trillion dollars. It’s not in the 30’s, but it will be. The projected deficits are roughly $1 trillion a year, on a normal basis. If we have COVID relief packages, it kicks those numbers even larger. This is an ongoing threat to our nation and to the wellbeing of our citizens, and has to be a priority for you and for the Administration.
I would note that about one-third of federal spending is the portion that is part of the budget that you work on, and that we vote on. Two-thirds is automatic, so called non-discretionary; Medicare, Medicaid, Social Security, and interest. Contrary to what you indicated in your testimony, our interest rates have not been about the same over the last 30 years. They come down dramatically and are now ticking back up. As a matter of fact, Bill Clinton called me after I lost my race back in 2012 and said his biggest concern was that interest rates going back to their normative level would take our interest payments to be even greater than our military spending.
So this is a major issue that you need to focus on. I would encourage you, and hope that you will include in the analysis and reports you provide not just the one-third that we vote on, but the two-thirds that we do not vote on, and project where that’s going to be heading over the coming decade. This will determine whether we are able to keep up with other nations in the world, and maintain our lead as the hope and guide for democracy throughout the world….I very much underscore the importance of this for all of us. We simply cannot keep going on spending trillions of dollars more than we take in, without suffering high rates of inflation into the future, and potentially losing our lead in the world.