This post originally appeared at https://www.badgerinstitute.org/emergency-ended-so-should-federal-spending-spree-says-johnson/

Senator lays out for Badger Institute audience a plan to address deficits and debt

Troubled by what he calls the insanity of unchecked federal spending, U.S. Sen. Ron Johnson says he will lead an effort to produce a balanced budget and restore the value of the dollar.

Congress needs to return to pre-COVID spending levels, adjusted for population growth and inflation, in order to avoid another massive deficit, said Johnson, who kicked off the Badger Institute’s 2025 Speaker Series on Jan. 17. 

Working with congressional allies, Johnson plans to use his position on the Budget Committee to use the budget reconciliation process to develop a new spending baseline.

Reconciliation is a congressional process that allows for expedited consideration of specific spending, tax, and debt-related measures. Reconciliation legislation isn’t subject to the Senate filibuster, and can pass with a simple majority vote rather than facing a 60-vote threshold.

Johnson, who was a businessman and an accountant before joining Congress, laid out the astronomical growth of the national debt over the last four decades.

“We’re mortgaging our children’s future,” he told the audience. “It’s immoral, and it has to stop. When I got into Washington, D.C., in 2011, the debt was at $14 trillion. Now it’s $36.3 trillion and, according to President Biden’s budget, it’ll be at $52 trillion in 10 years. I mean, this is clearly unsustainable.”

Interest payments on the debt alone have grown from pre-pandemic levels of under $300 billion annually to nearly a trillion dollars this year — more than the United States spends on national defense, he said.

The devaluation of the dollar is another consequence of massive federal debt. Johnson pointed out that a 1998 dollar is now only worth 51 cents, a 2014 dollar is worth 74 cents, and a dollar from 2019, just before the pandemic, is now worth 80 cents.

“We’re trying to inflate our way out of the debt,” he said. “It’s not working. We’ve basically cut the value of the dollar in half in about 26 years.”

The massive 2020 budget, inflated by COVID-related expenditures, effectively created a new baseline for spending.

Given the nature of the pandemic and its economic impact, some of the spending increases at the time were justified, Johnson said. But once the crisis was addressed, spending should have returned to previous levels.

He compared it to a family with an annual income of $100,000 suffering a sudden medical crisis that balloons their expenses to $150,000. While they might have to take a loan to pay the medical bills, once the crisis is over, a responsible family would bring their spending back into alignment with their income. The federal government hasn’t, he said.

“In 2019 we spent $4.4 trillion. During the pandemic, 2020, we went on this massive spending spree.”

Federal spending jumped to $6.5 trillion that year. “For the last five years, we’ve averaged $6.5 trillion, which is more than 50% higher than it was in 2019. Last year we spent $6.9 trillion. President Biden budgeted to spend $7.3 (trillion) and like nobody’s calling this out, nobody’s outraged by this.”

The problem is exacerbated by the fact that few in Congress actually know how much the federal government spends in total. Johnson explained that three years ago, when Congress was debating a spending measure, he asked his colleagues during a meeting if anyone knew how much the federal government had spent the year before.

“Nobody raised their hand. Nobody gave me an answer,” he said. “We are the largest financial entity in the world. Members of Congress are in effect the 535 members of the board of directors. But we never discuss total spending.

“All we ever pass is the appropriation accounts, the discretionary spending accounts, which is less than 70% of the budget. Everything else is on automatic pilot, so people aren’t even aware of the massive spending.”

To determine what a reasonable spending level would be, Johnson spent his Christmas break reviewing budget tables from the last few decades. What would be the current baseline be, he wondered, if federal budgets had simply grown based on population and inflation levels?

He began with 1998, the last year that the federal government had a balanced budget, $1.7 trillion. Johnson factored in inflation and population increases while plugging in current levels for Social Security, Medicare and net interest, and found that the new baseline for the upcoming budget would be $5.5 trillion. Since federal revenues are currently around that amount, the budget would be balanced.

Using the same approach, he examined the 2014 budget under Barack Obama, which would generate a baseline today of $6.2 trillion — more than a trillion-dollar savings over Biden’s proposal of $7.3 billion.

After doing the same with 2019 figures, he reviewed Trump’s final budget for fiscal year 2021, which included a spending projection for 2025 of $5.4 to $5.5 trillion. With mandatory expenditures factored in, the baseline spending level would be $6 trillion.

“From my standpoint, that’s the range that we ought to be talking about when we pass a budget for reconciliation, somewhere between Bill Clinton’s inflated-level $5.5 trillion and President Trump’s inflated-adjusted 2025 budget of $6 trillion. That is what I’m fighting for.”

He emphasized that current deficits are not the result of the 2018 Tax Cuts and Jobs Act, as some have claimed. The tax relief package paid for itself three years earlier than the Congressional Budget Office had initially estimated, and revenues are up.

“We don’t have a revenue problem,” he said. “We have a spending problem.

“It’s not like deficit spending is a new phenomenon, because we don’t have to balance a budget like states do,” he added. “Members of Congress really aren’t that particularly interested in balancing the budget, particularly now that we just suspend the increase in the debt ceiling. So it’s very painless to spend money we don’t have here in Washington.”

His plan is to get Senate Republicans to commit in advance to discretionary spending levels as well as numbers for other mandatory spending (excluding Social Security, Medicare and Medicaid). The Senate Budget Committee would then pass a budget with instructions to appropriations committees to stay within the established parameters.

Johnson is hoping to create public pressure on legislators to do the right thing. He’s also working to bring the Trump administration on board with this approach.

“I’ve been very up front, saying I don’t think people who voted for President Trump had the expectation that he would abide by Joe Biden’s spending levels,” he said. “I’m pretty well putting everybody in the administration on notice.”

Johnson will look to allies such as Sen. Rick Scott (R-Fla.), Sen. Mike Lee (R-Utah), Sen. Bernie Moreno (R-Ohio) and others to regain control of the budgeting process, he said.

He has been encouraged that a recent essay he wrote for The Wall Street Journal putting forth these ideas is gaining traction inside Congress. Some still throw up all kinds of roadblocks, he said, but they can’t refute its logic.

“They can’t refute the fact that this is exactly what American families, American businesses need to do. Why is Congress exempt from fiscal responsibility?

“It’s not too late,” he added, “but we need the willpower to do it.”  

Michael Jahr is former Vice President at the Badger Institute, current CEO of Jahr Productions, and Producer + Director of Liberty at Stake: The Joshua Glover Story.

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

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