Last week, I attended an auction of our public debt in Washington.  $57 billion in securities was sold during a competitive bid process.  Individuals, large brokers, and foreign entities sought to purchase U.S. Treasury bills and notes on the promise that the government will repay them with interest at a later date.  Over the course of one week, the federal government sold $191 billion at auctions like the one I witnessed.  In January, 26 auctions were held, totaling $690 billion.  The auctioned treasuries were a mix of new debt and existing debt that was renewed.

These auctions are functions of our overspending.  The federal government is projected to add another $1.5 trillion to the national debt by the end of 2011 according to an analysis by the Congressional Budget Office.  With 40 cents of every dollar borrowed, leaders in Washington must cut spending and begin a serious discussion about future priorities.  Eventually, this money must be repaid, and failing to address our problem now passes the problem to our children and grandchildren.

                    Failures of Spending Beyond Our Means

President Obama has overseen the largest deficits as a share of the economy since World War II.  If, as expected, our deficit is greater than $1 trillion in 2011, it will mark the third year in a row of overspending by more than $1 trillion.  Because of this runaway spending, credit agencies that rate an entities ability to repay its debts have warned they may be forced to downgrade America’s credit rating.  Doing so would increase the cost of borrowing and make it more difficult to meet our obligations.

This week, President Obama will unveil his suggested budget for the coming year.  As Congress begins to debate the budget and spending for next year, I want to use this opportunity to change course.  Failure to cut our spending and rein in government growth threatens our future prosperity. 

                              Important Early Steps

The House of Representatives, led by new Speaker John Boehner and Budget Chairman Paul Ryan, has proposed significant reductions in federal expenditures beginning immediately.  They call for cutting $100 billion this fiscal year.  This is a move in the right direction to gaining control over the problem.

In addition, I am a co-sponsor of a balanced budget amendment to the Constitution.  A majority of states, including Mississippi, mandate that the state budget be balanced.  The federal government should be no different.  To continue to spend in excess of revenues is irresponsible and must be stopped.  I also support The Full Faith and Credit Act (S.163), which requires the Treasury Department to make interest payments on federal debt first if the debt ceiling is not raised.  At $14.1 trillion, our current debt level is approaching the ceiling Congress set.  Reaching this level should be an opportunity to achieve meaningful spending cuts.

The debt crisis created by out of control federal spending leads to higher borrowing costs, higher taxes, and a devalued dollar.  All of this will reduce investors’ return on capital and serve as a powerful incentive for businesses and investors to delay or even deter investment in American jobs and innovation.  To help the economy grow, Congress needs cut federal spending to end the uncertainty entrepreneurs, businesses, and taxpayers face.