June 17, 2009
Dear Friend,
I picked up The Economist this week. They crisply captured the economic "bind" we face:
"In the short term government borrowing is an essential antidote to the slump. Without bank bail-outs the financial crash would have been even more of a catastrophe. Without stimulus the global recession would be deeper and longer--and it is a prolonged downturn that does the greatest damage to public finances. But in the long run today's fiscal laxity is unsustainable". (The Economist, June 13)
It is clear that the next several years will be the economic equivalent of threading a needle. While we address the massive unfunded liabilities associated with Social Security and Medicare (now well in excess of $50 trillion), we will need to identify the moment at which our nascent recovery is self-sustaining and put on the brakes. If we are to avoid inflation, interest rates will need to go up and government spending will need to go down. Both of those things will be enormously unpopular, but the Federal Reserve and the Congress will need to remember that inflation is far more damaging.
Although this won't be easy, I think we're setting the stage. There is of course no way to address our unfunded liabilities and budget growth at the federal, state and municipal levels without getting spiraling health care costs under control. We're working on that, and I'll be watching closely to make sure that cost reduction is a key part of health care reform.
This week, the House will also take up a bill requiring Congress to observe "pay-as-you-go" legislation I have co-sponsored. Simply put, that means that if Congress is going to spend a dollar, it has to have the money or give up spending a dollar somewhere else. Pretty much like every household and business in the country. No more charging entitlements, wars or tax cuts to the national credit card.
I am committed to working towards "pay-as- you -go" legislation that is true its' title. This concept - put into practice--combined with the economic recovery we may be starting to see, will help us thread the needle necessary to sow the seeds of our economic recovery.
Sincerely yours,
Congressman Jim Himes
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