It’s Always a Good Time to Impose Fiscal Discipline

My family loves to hike, and together we have hiked in some beautiful places. One of our favorites is Glacier National Park in Montana. On the trail my wife, our twin daughters, and I push forward together, rest when we reach a beautiful view or milestone, and then move ahead.

One thing we have never done after resting, however, is just sit. Glacier’s great, but you wouldn’t want to try living there, especially in wintertime. No, quitting or going backward after reaching a milestone doesn’t work; you’ve got to keep going. It’s a principle I wish more understood when it comes to public budgeting.

In my state of Ohio, which suffered enormously during the recession, we had to make tough choices to close an $8 billion budget shortfall and stop our fiscal and economic freefall. It took discipline, but today we have a $2 billion surplus, 360,000 new jobs, and improved outlooks from the credit-rating agencies, and we have cut taxes by $5 billion in the past four years.

Now, with the tough times behind us and Ohio in a stronger position, some have called for relaxing our fiscal discipline. “Why not spend a little more?” they ask. “Don’t worry if the money isn’t all here now. It’ll come in the future, right?” They couldn’t be more wrong. It’s natural to rest after some hard work, but if you sit too long, you will forget what it took to get you there, and then you’ll be back in trouble. This is the source of so many states’ budget troubles right now, I believe.

We have seen this same story play out in Washington. As chairman of the U.S. House Budget Committee, I was the chief architect of the bipartisan effort that, in 1997, balanced the federal budget for the first time in a generation. The result was a wave of economic renewal, lower taxes, and a projected surplus of $5 trillion. I left Congress shortly afterward, proud of what we had accomplished and optimistic about the future. After so much hard work, however, Congress lost its appetite for discipline. As the economy improved, the temptation to spend became too great, and in just a few years Washington was back into deficit spending.

Ohio just finished its budget process. Having seen Washington backslide after getting its budget house in order, I made it my top goal to protect the conservative budget policies that have restored Ohio. There is always a push and pull between the executive and the legislative branches, but working out compromises on legislation does not mean sacrificing your principles, and for me, the principle on which I do not compromise is fiscal responsibility. Ohio cannot go backward but must defend and build upon the fiscal conservatism that has gotten us back on track. Our new budget does that.

As we saw recently in the report by former Federal Reserve chairman Paul Volcker, too many states lack this kind of discipline. The report called for more truth and integrity in state budgeting, or we put future stability at risk. A previous study by Volcker warned that the budgeting practices most states use allow “gimmicks and short-term measures that obscure actual financial conditions.”

These are not just state problems. Washington budget-writers have long practiced fiscal sleight of hand. Sustainable budgeting is not built on such an unstable foundation, however. Leaders must consistently manage by a core set of values and stick by them. In Ohio the ideas that have served us well are balancing our budget to create stability, cutting taxes to help create jobs, saving money for a rainy day, being honest and realistic about future revenue and spending projections, and making sure that the programs worth having work well.

At the end of the day, budgets are not really about money, are they? They are about priorities and commitment. In Washington, too many people put their self-interest and political popularity before the good of the nation. We will be living with the fallout of those priorities for generations unless we act soon. The federal government must balance its budget — we should enact a balanced-budget constitutional amendment if it fails to do so — and states themselves should lead the way with the conservative ideas that we know work.

This is not impossible. We have done it before by taking a break from the politics, reaching across the aisle, and holding true to our principles while being willing to work out the details. America was better for it. We can do it again.