I always enjoy watching a Great Lakes ore carrier come into port. At 1,000 feet in length, the massive vessels can carry up to 78,000 tons of cargo. When a vessel that size builds up a head of steam it can't stop suddenly, or turn on a dime. The captain has to know where he is going and carefully steer the vessel, taking every contingency into account. Reacting too late will leave him on his bridge with the helm hard over, helplessly watching his ship sail into disaster.
This week President Obama signed a new law that will help steer our ship of state around a looming $9 trillion iceberg on our nation's 10-year horizon. This new law follows a very simple, common-sense rule: If you propose new spending, you have to find a way to pay for it, either by cutting another program or identifying new revenue source.
During the Clinton years, the so called 'pay-as-you-go' rule helped us bring our annual budget from a $600 billion deficit to a $237 billion surplus. The rule was abandoned under President Bush and the deficit has increased every year since.
Half the projected deficits we will accumulate over the next 10 years can be traced to two programs the Republicans passed without following pay-as-you-go rules. The Medicare Part D prescription drug benefit accounts for $700 billion of the deficit over the next decade and the Bush tax cuts total $4 trillion. Vice President Dick Cheney's contention that "deficits don't matter," has proven to be dead wrong.
Some have suggested that we just balance the budget in a single year and start living within our means right away. Unfortunately, this would have dire consequences. Of the current $3.8 trillion budget only about $1.4 trillion goes for discretionary spending such as veteran's benefits, education, transportation, military and homeland security. The rest funds entitlement programs such as Social Security and Medicare. Eliminating our $1.3 trillion deficit this year, without raising taxes, would require massive cuts in programs important to the health and wellbeing of our citizens. This is simply not acceptable.
Tackling the deficit requires a long-term solution and enacting pay-as-you-go rules is an important first step. However, it is also important to make sure that we continue to invest in the things that keep our economy growing.
Underinvestment in our infrastructure has led to growing congestion on our nation's highways, costing our economy $87 billion each year in wasted time and fuel. This is the equivalent of a congestion tax that we are all paying in the form of more expensive goods and services. It is making America less competitive in the global marketplace.
Health care reform is a critical component in a long-term plan to balance our budget. Currently, 16 percent of our national gross domestic product is consumed by health care costs. Without reform, a quarter of our economic activity will be consumed by health care costs by 2025. Millions of Americans will still lack affordable coverage and many of those who do have it will be only one layoff or one premium increase away from losing it.
Addressing our nation's long-term challenges and building a thriving economy will generate the revenues we need to eliminate the deficit and pay down our national debt. It was the course we were on in the late 1990s when we were projecting budget surpluses far into the future. The new pay-as-you-go rule will help us get back on the course of fiscal responsibility.
Jim Oberstar, DFL-8th District, is a member of the U.S. House and chairman of the House Transportation and Infrastructure Committee.