Guest blog post by Rep. Frank Lucas (OK)
According to the non-partisan Congressional Budget Office, the President’s budget proposal for 2010 will produce a $9.3 trillion addition to our current deficit over the next ten years. To pay for this, the federal government sells U.S. Treasury bonds and bills to people, companies, even foreign countries. As the United States deficit grows, however, our need for additional borrowed money grows. Unfortunately, our two largest customers- Asian markets and Middle Eastern countries- have also been experiencing a market decline and falling oil prices, decreasing their ability to purchase these bonds and bills. Even more importantly, as our national debt continues to grow, investors will be less enticed to purchase bonds and bills backed by a government that seems intent on wracking up debt without paying it off.
All of this leads to one clear fact: sometime soon, the federal government will be forced to increase the interest rate on Treasury bonds and bills. In turn, our borrowing cost will increase significantly, raising our overall national debt. Even more important, raising the interest rate of Treasury bonds will force other lenders to raise their interest rates on variable loans and new loans, increasing the cost to do business across the board. And- as we all saw with the negative affects of the increased business cost on energy companies last summer- any increase in the cost to do business is passed on to American consumers in the form of increased prices.
As we continue to discuss the President’s budget proposal for 2010, we must remind ourselves of the true cost of our mounting deficit. In addition to burdening our children and grandchildren with the debts of our poor choices, we could potentially be worsening our already fragile economy. Instead of continuing to borrow our way out of our current financial problems, we must now- more than ever- focus on fiscal discipline.