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Friday, Apr. 29, 2016

More spending will not lower our debt

Monday, April 12, 2010

Dear Nebraskans,

Two weeks ago I made my way across the state, hosting 13 public events in as many towns. One issue stuck out as critically important to many Nebraskans: our national debt, and what we are going to do about it. Our debt has long been of great concern to me, especially now as unfettered borrowing continues to bankroll an increasing amount of our federal expenditures. The federal government continues to spend more than it earns in revenue, and federal programs are only projected to widen this gap in the coming decades.

This has been especially true with the health care legislation recently signed into law. Proponents of the bill tout that it cuts the federal deficit by $130 billion over the next ten years; however, it is important to put this number in proper context. The health care law shows savings by deliberately excluding certain costly aspects of health care reform. For example, the bill assumes that physician payments under Medicare will be cut by 21 percent starting in 2010 and then remain at current-law levels. Realistically, Congress will restore Medicare physician payment rates costing nearly $250 billion over the next 10 years. This provision alone will send overall health care costs into the red.

Even taking the savings from the health care reform law at face value, it pales in comparison to the federal spending numbers released by the Congressional Budget Office last week. The report estimated the federal deficit for the first half of the 2010 Fiscal Year to be $714 billion, nearly six times the amount of what is projected to be saved from the health care reform law over the next ten years. In other words, in just six months, the federal government has over-spent six times what health care reform was projected to save in 120 months.

Reducing our deficit and national debt will only be accomplished by doing what so many Americans have already been doing over the past few years: tightening our belts and significantly cutting down on spending. Unfortunately, some in the current Administration seem to think the answer is more taxes, not less spending. Just last week, White House Economic Adviser Paul Volcker suggested the idea of levying a Value Added Tax (VAT) to raise revenue.

Given the current economic conditions and high unemployment, raising taxes is not the answer. In addition to our current system, this tax would be levied on businesses and manufacturers and would be passed onto the people almost every time they open their wallets: at the grocery store, the department store, and even the gas pump. A VAT would smother our recent economic progress, would continue the tax-and-spend policies that have already pushed us into uncharted waters, and would come with no guarantee that the added revenue would actually be used to decrease the deficit. Once established, the VAT could increase year after year to pay for even more government spending. Reeling in our debt will not be accomplished by expanding the government, but by being more responsible about spending.


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Sen. Mike Johanns
Sen. Mike Johanns
U.S. Sen. Mike Johanns is a former U.S. Secretary of Agriculture, Nebraska governor and Lincoln mayor.

Address: 404 Russell, Senate Office Building, Washington, DC 20510

Phone: (202) 224-4224
Fax: (202) 228-0436

You may contact Senator Johanns by emailing mike_johanns@johanns.senate.gov. If you would like to receive a response from Senator Johanns, please ensure you include your name, full address, and phone number.