Today, the Bush administration announced that the final federal budget deficit for fiscal year 2002 was $159 billion. Excluding the Social Security surplus, the deficit exceeded $300 billion. Just two short years ago, the federal budget had a surplus of over $200 billion. The turnaround under President Bush represents the largest reversal in over 50 years, and means that the federal government will need to borrow over $2 trillion from the Social Security trust funds over the next decade. Rep. Adam Smith issued the following statement on the current state of the American economy:
“While I agree with the president that we must meet our most pressing priorities of protecting our country against terrorism, improving our international relations, and growing our economy and that these needs warrant small, short-term deficit spending, I have serious concerns about the current lack of a responsible economic plan that includes a balanced budget. While a one or two year small deficit alone won’t jeopardize our future, if we continue down this path of undisciplined spending and unrealistic budgeting, our economy will be in greater trouble.
“Currently, we face growing budget deficits and a hesitant economy. Rather than continuing the legacy of fiscal discipline, the 2001 $2 trillion tax cut and the Administration's relentless push for more big tax cuts have destroyed the bipartisan spirit of fiscal restraint that swept through Congress in the 1990s. As a result, demands for additional tax cuts and new spending - especially in the later years of the decade - continue unabated despite the projection of an overall budget deficit, including the Social Security surplus, of $1.6 trillion over the next 10 years. Restoring fiscal discipline will help return our nation’s economic confidence and trigger a longer economic recovery.
“War and recession have brought back deficits, but they are not an excuse to undo long-range budget discipline. To get back on track, Congress and the president must have the courage to make the hard, honest choices that are necessary right now to ensure that those deficits will be small and short-term. With retirement of the baby boom generation approaching, failure to discipline our budget in the coming years will have far reaching ramifications and add crushing new burdens on workers and taxpayers in the following decades. We must take action now with an honest discussion of the choices we face and develop a budget that is fiscally responsible.”
Rep. Adam Smith has consistently been a strong advocate of fiscal discipline and honesty in federal budgeting. He believes that a return to sincere and deliberate fiscal discipline must be the cornerstone of our government’s economic policy. In the 1990s when Wall Street and Main Street saw that the government was serious about keeping its books in order and reducing the national debt, interest rates fell and private investment grew. Businesses created jobs and all Americans benefited from lower interest rates on their mortgages, student loans and consumer credit.