Your Opinion: Congressman misunderstands federal fiscal policy

Dear Editor:

It is embarrassing that all of us in the 3rd Congressional District are represented by Blaine Luetkemeyer. While knowing next to nothing about the federal fiscal process, Luetkemeyer votes in Congress and pontificates to the public as if he knows something. (“Getting our nation on the path to fiscal sanity,” News Tribune, April 23, p. B3.)

The fear that paralyzes Luetkemeyer’s rational faculties is the fear that spending on social benefits (Social Security) will crowd out spending on the military. Yes, this would be bad if it happened, but it won’t happen.

Luetkemeyer is simply mixed up. He reveals a fundamental misunderstanding of the budget process when he writes, “There are two sides of the federal budget: discretionary and mandatory.” The two sides of any budget are income and outgo, not the two types of spending that Luetkemeyer talks about.

Having targeted spending it’s Katy bar the door from that point on. The only way to save the military is cut, cut, cut other spending. Not so. The U.S. pays for much of what it does by borrowing. The U.S. has sold around $21 trillion of debt securities, Treasury bonds, etc. People who hold these securities will be repaid with interest and the government will sell new securities. The debt is rolled over and government keeps running, at least until people like Mr. Luetkemeyer screw it up.

In addition to cutting spending, Luetkemeyer’s favorite proposal for screwing things up is to enact a federal balanced budget amendment. He says, “Individuals, families, businesses and states must balance their budgets, and so should the federal government.”

Individuals, businesses and states are fundamentally different from the federal government. They can’t print money. The federal government can always meet its obligations. Individuals and businesses can’t. Binding the federal government in a fiscal straight jacket will limit its ability to deal with emergencies all because of a mistaken belief that otherwise it may not be able to pay its debts.

A reasonable person, not Luetkemeyer, might ask, how much debt can the federal government safely issue? Right now outstanding debt is about 105 percent of GDP and the markets are fine with that. Interest rates on federal securities are unusually low. If the market were worried about the likelihood of repayment, rates would be much higher. They’re not.

Luetkemeyer just doesn’t get it and this is embarrassing.