Just because New Mexico benefits from federal programs does not mean that debt denial is the answer
Reducing the towering $17 trillion federal debt is something many people in New Mexico want and think is urgently needed – but many here fear doing so will harm an already struggling New Mexico economy largely dependent on federal spending.
The reality, however, is that not acting to solve the national debt will cause greater harm to programs that benefit the New Mexico economy than taking action.
Put simply, we must take action.
“At some point in time the market will take over and do it for us, as it is doing for the European Union, as it has done for Japan and as it is beginning to show even in the Chinese market,” former U.S. Rep. Charles Stenholm, a Texas Democrat, said this month when addressing the Economic Forum in Albuquerque.
As reported in the Journal, Stenholm argued that Washington’s immense dysfunction leaves it incapable of passing a budget and dealing with arguably America’s most pressing issue: Ongoing deficit spending and the cumulative federal debt.
If unchanged, these twin problems will cripple the economy.
If we do nothing, our national debt will be larger than the entire economy in 20 years, and twice its size within 50.
While most New Mexico residents probably support deficit reduction, the thought simultaneously causes angst.
Accounts of possible future cuts leave many concerned for the New Mexico economy due to the impact of federal programs such as Sandia National Laboratories and Kirtland Air Force Base – both of which receive significant federal funding and in turn spend part of that money with private contractors.
These, along with Los Alamos National Laboratory, White Sands Missile Range and two other air force bases, also serve a significant role in U.S. national security.
So, many assume that a priority of state leaders should be to protect the status quo and stay away from addressing the federal debt problem out of self-interest. The reality though is that interest on our unsustainable debt is already the second-largest category of the federal budget and is slowly crowding out all types of federal expenditures.
In 2011, the federal government spent more than $230 billion on interest on the debt – more than it spent on education, housing, Head Start and food stamps combined. In 2023, interest costs will be nearly $825 billion in that single year alone.
Therefore leaders in Washington must begin working together to balance the budget and reduce long-term debt. Avoiding the debt problem altogether would end up harming programs like Sandia and Kirtland more than sensible cuts throughout the federal budget.
In the near term, Congress should first replace the sequester – the nationwide, automatic spending cuts aimed at causing $1.2 trillion in reductions over the next nine years – with larger, more gradual spending reductions and pro-growth tax reform.
Just because New Mexico benefits from federal spending and serves an important national role does not mean that debt denial is the answer.
If we remain on the current, unsustainable path – including the projected trajectory of such entitlement programs as Medicare and Medicaid – these programs and their associated interest will crowd out discretionary spending, including that needed to fund vital economic drivers and national security institutions such as those in New Mexico.
The time is now to prioritize spending, look past immediate returns in districts and states, and begin to act. If not, the market will quickly leave us mirroring the European Union, just as Stenholm argued.
The New Mexico Prosperity Project is the official state deployment partner of BIPAC, a non-partisan organization that assists thousands of businesses with communications on public policy issues.