One of the first things that every new Member of Congress receives is an identification card. There are only 435 such ID cards in the world – one for each member of the US House.
Physically speaking, the Congressional ID card isn’t anything special. It looks a lot like any driver’s license.
But unlike a driver’s license, the Congressional ID card authorizes members of Congress to spend your money. It works like a credit card. Members swipe the card. The treasury prints money. And this credit card has the world’s highest debt limit.
The debt limit is backed by the full faith and credit of the United States. That’s it. There is no collateral. There is no guarantor to bail us out if we get into trouble.
Right now, the government borrows 43 cents of every dollar that it spends. Our deficit this year will be $1.5 trillion. Our national debt is over $13 trillion.
People sometimes compare the national debt to a homeowner’s mortgage. After all, most of us can’t afford to pay cash for a home or condo. So we borrow 80% of the money and pay it off over 30 years. If we can borrow to buy homes, why can’t the government borrow to pay its bills? Good question.
As the residents of Hawaii’s First Congressional District join to decide who will be responsible for the Congressional credit card, I ask them to examine my record and my opponent’s record. I have always been a careful steward of the people’s money. I have never voted for a tax increase. I know that every dollar the government spends comes from an American worker or is borrowed from our children. I promise to be as careful with their money as I am with my family’s finances. My opponent cannot make the same pledge.
When we take out a mortgage, we receive something tangible in return – a home. This durable asset gives us an immediate benefit — shelter — and offers the potential for long-term capital preservation and appreciation.
Printing money gives us an immediate benefit – more to spend. But this benefit evaporates as quickly as we spend the money. Unless we use the money for bridges or roads, there is usually no asset. And there is no potential for long-term capital appreciation.
Government debt is more like consumer credit card debt. Imagine if a consumer used a credit card to finance 43 cents of every dollar that he spent. And with those 43 cents, he bought nondurable things like food and clothing. Food and clothing are important. But those goods lose their value as soon as you buy them. There is no durable asset to liquidate if times get tough. There is no potential for long-term capital appreciation.
At a borrowing rate of 43 cents for every dollar spent, our hypothetical consumer will soon be buried in debt. Bankruptcy becomes the only option.
Our nation is on the same path. Secretary of State Clinton says that our debt poses a security risk. Federal Reserve Chairman Bernanke stresses that our debt levels are unsustainable. They’re right. And we should do something about it.
The first thing we need to do is make sure that we put fiscally responsible people in charge of the Congressional credit cards. I have built my entire political career on fiscal responsibility and government accountability.
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Charles K. Djou is an adjunct professor at Hawaii Pacific University. He is an Afghanistan war veteran and a lieutenant colonel in the Army Reserve. Djou served in the U.S. House, Honolulu City Council and Hawaii State House.