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Tuesday, Apr. 21, 2015

Ending Washington's addiction to debt

Monday, October 11, 2010

Recently, I received a letter from a Nebraskan about Recovery Act funds spent in his county. While he supported the investment in his community, he also was concerned about the need to reduce government spending and cut the deficit. He said with trillions of dollars of debt piling up, we need to end Washington's addiction to the national credit card. I agree.

From Surpluses to Deficits

During my time as a Senator, the federal budget has gone budget surpluses in the early 2000s to record deficits today. Back in 2001 when Washington was taking in more money than it was spending, it made sense to cut taxes and let that money stay in Nebraska. Additional tax cuts in 2003 made sense to help the economy and job growth.

But then the costs started to pile up. We had to spend to support our troops fighting in Afghanistan and Iraq. Other government spending kept going up, too. The Medicare prescription drug bill, while popular with recipients, added more deficit spending.

Then, the country was hit with its worst financial crisis since the Great Depression. Our banking system fell into chaos. Home foreclosures soared after bad mortgages and slumping housing values combined to devastate the real estate market.

Things got so bad in the fall of 2008 that economic experts and government officials warned that without immediate action, the country would fall into a severe depression. The Recovery Act of 2009 was a needed response, and we've watched as experts have concluded that it lifted GDP and supported millions of jobs around the country that otherwise would have been lost.

How Do We Turn Things Around?

The question on everyone's mind is how to get from deficits to surpluses again. It's a difficult question with few absolute answers. But everyone agrees the biggest challenge is returning our economy to prosperity. A healthy economy is the first step on the road to restoring fiscal sanity.

The Recovery Act is actually not all spending, as most people think. More than one-third of it delivered tax cuts to help families, businesses, and to grow our economy. In 2009 alone, tax cuts in the Recovery Act put $9 million per week back into Nebraskans' pockets. That year, over $346 million in tax relief stayed in Nebraska so that Nebraskans could have extra money to pay electricity or gas bills, buy school clothes for children, or fix up a car.

It also provided over $425 million in funding for Nebraska school districts, which stopped steep cuts to education budgets across the state. Without Recovery Act funds, Nebraska taxpayers would have been on the hook to close the gap. By helping the state government we were able to avoid tax hikes -- including property tax hikes -- during the recession while saving local Nebraska jobs.

We aren't out of the woods yet, but indicators are showing promising signs that the economy is slowly improving. After 22 months of job loss, the private sector now has created jobs for nine months in a row.

We Made Investments With Long-Term Benefits

By cutting taxes, helping to pay for Nebraska services, and creating jobs, we made a long-term investment in the economy -- an investment that will grow our economy so that we can reduce the deficit and lower the debt. While these goals should always be a priority, it's something that couldn't be done while we had double-digit unemployment and a struggling economy.

The challenges ahead are great, but with a strong economy we stand a much better chance of reducing both the deficit and the national debt. We owe it to ourselves, but more importantly we owe it to future generations.


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