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It Shouldn't be Greek to Us

By Sen. Jon Kyl

For an example of what a government debt crisis looks like, see Greece.

That nation's debt stands around 120 percent of its gross domestic product, and it's looking more and more like Greece won't be able to pay its creditors absent foreign intervention. That, of course, makes it very risky for creditors to lend Greece more money - indeed, on April 27, the country's credit rating was downgraded to "junk," the lowest possible level. Like individuals with poor credit, what Greece can borrow, it will have to pay back at higher and higher interest rates. If Greece can't borrow enough, it won't be able fund its obligations. You get the picture of the downward spiral the debt problem unleashes.

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Greece is a developed nation, yet finds itself in a position where it might default on its debt to other nations. Other European countries find themselves on the precipice as well after years of runaway public spending and expansions of the welfare state.

Here in the United States our debt is approaching crisis levels, and the situation in Europe provides a cautionary tale about what happens when profligate spending combines with a lack of fiscal restraint. The United States needs to get its debt under control in order to avert serious consequences in the years ahead.

Washington, however, has yet to make a commitment to fixing the problem. The President's budget, for example, foresees the debt doubling in five years and tripling in 10. Trillion dollar deficits are the norm every year of the Obama budget. Democratic leaders continue to avoid tough choices by deeming new spending measures as "emergencies," thus avoiding the need to offset the spending with concomitant savings, thus digging the nation deeper into debt.

Since Washington has shown no will to cut spending, all this new spending can only mean new, and higher, taxes. At the first meeting of the President's "debt commission," President Obama told the group's 18 members that "everything has to be on the table." Those words usually translate to: "brace for tax hikes."

I believe that the government is big enough as it is, and that Americans already pay more than their fair share of taxes. So instead of considering new taxes, the President and Congress should focus squarely on cutting spending. Reducing the debt to manageable levels will require some difficult cuts, but there are a number of steps Congress and the administration could take right now.

First, the returned TARP funds should be used to pay down the deficit. The administration could also refrain from spending the unused economic stimulus funds. Additionally, Congress could stop spending more every year by imposing federal spending caps.

Moreover, if President Obama really wants a commission to look into the problem, why not create a commission devoted solely to cutting spending? I supported a proposal put forth by Senator Brownback to create such a commission earlier this year, but that measure failed to garner the necessary support in the Senate.

Reductions in federal spending can return the government to a sustainable path. When the economy was booming, it was easy to think that our creditors would always be there to lend us more even though the debt was growing. We now know that they won't. In Washington, it often takes a crisis to prompt action; but when it comes to the debt, waiting until the crisis hits is too late.

Sen. Kyl serves on the Senate Finance and Judiciary committees and as the Senate Minority Whip. Visit his website at www.kyl.senate.gov.
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