Debt Menace Grows, but Pols Only Fight Each Other
In the movies, when a giant meteor is hurtling toward Earth, the United States manages to unite on strategy to stop it, though the effort usually requires an action hero.
[IMGCAP(1)]But in the real world, we’ve known for years that a debt bomb is hurtling toward the U.S. economy. Instead of uniting to stop it, though, our leaders are fighting each other over whether to fire a rocket (spending cuts) or a laser (tax increases).
In the real world, the bomb’s approach is actually accelerating. And we don’t have an action hero to rescue us from fiscal catastrophe. If we did, he’d say, “Fire everything we’ve got.”
I first heard the line “we have to bring entitlements under control or we’re going to be in trouble” from Alan Greenspan — when he was chief economist in Gerald Ford’s White House in the mid-1970s.
That was the first meteor warning I can remember. Since then, the alarm has been sounded more urgently by the year — by economists, White House officials of both parties and Members of Congress.
Their message: Benefit promises made to retirees under Medicare, Medicaid and Social Security — plus interest on the debt — will eat up the entire federal budget, leaving nothing left for investment in education or infrastructure.
Moreover, the debt will lead to an inflated currency, high interest rates, crippling taxes, a lower standard of living, a declining U.S. competitive position in the world and — as one expert put it this week — “fiscal slavery” to China.
And, still, nothing’s been done. Even when Independent presidential candidate Ross Perot forced both parties to pay attention to the federal budget deficit in the 1990s — and when President Bill Clinton and a Republican Congress balanced the federal budget and projected paper surpluses — the long-term debt bomb kept on coming.
Even as President George W. Bush ran up higher debt with tax cuts, unpaid-for wars and the Medicare prescription drug benefit (which Democrats wanted to be bigger), he proposed Social Security reform and a debt commission.
Democrats torpedoed both. Now, President Barack Obama is running up the debt even faster — with a stimulus program to fight Bush’s deep recession and new entitlements for college students and the uninsured, plus tax cut extensions — but also wants a deficit commission.
And, no surprise, now Republicans are refusing to play. In the most outrageous act of irresponsibility in memory, seven Republican Senators last month killed a bipartisan commission proposal they had previously co-sponsored.
If and when the debt bomb explodes, their names deserve to be memorialized in infamy: Senate Minority Leader Mitch McConnell (Ky.) in the lead, along with Sens. Sam Brownback (Kan.), Mike Crapo (Idaho), John Ensign (Nev.), Kay Bailey Hutchison (Texas), James Inhofe (Okla.) and (perhaps joining McConnell in the lead) supposed deficit-hawk John McCain (Ariz.).
McConnell’s lame excuses for abandoning the proposal of Sens. Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.) were that it was not tilted enough toward spending reduction and that Obama endorsed it only last month, not last year.
The No. 3 GOP Senate leader, Lamar Alexander (Tenn.), who voted for the measure, said it was up to Obama, not the GOP, to get seven votes from among 23 Democrats who voted against the bill (along with 23 Republicans).
Obama now is forming his own commission, with former Sen. Alan Simpson (R-Wyo.) and Clinton’s former White House chief of staff, Erskine Bowles, as co-chairs. They are both estimable moderates, but the commission will have no power to impose its conclusions — and Republican officials are balking at participation.
And so, the meteor hurtles on. A bipartisan group, the Petersen-Pew Commission on Budget Reform, issued a report last December, “Red Ink Rising,” warning that the U.S. public debt — the accumulation of annual deficits — had risen from 41 percent of gross domestic product to 57 percent just last year.
And, if present policies aren’t changed, the panel said, it will rise to 70 percent in 2013, to 85 percent in 2018, to 100 percent in 2022 and to 200 percent in 2038, nearly double the highest level ever at the end of World War II.
During the post-war era of U.S. prosperity, the debt has averaged about 40 percent of GDP.
At a Petersen-Pew forum on Tuesday, panelists proposed that the government set a target of 60 percent of GDP by 2018, develop policies this year to reach the goal, begin phasing in policy changes in 2012, after the recession ends, and enforce them with trigger mechanisms to impose cuts.
Petersen-Pew actually has prepared an illustrative list of measures to get to 60 percent. It includes the one idea Obama has proposed — caps on discretionary spending — plus some defense cuts, phasing out of farm subsidies, raising the Social Security retirement age, capping Medicare and Medicaid spending, tax reform to cap or eliminate deductions and imposition of a carbon tax.
The list contains sacrifices for practically everyone — which is why it can only be accomplished by a bipartisan agreement. Which is why it is not happening, as Republicans and Democrats strive to defeat each other rather than the common enemy.
With a few exceptions, this entire generation of politicians may live in historical infamy, as their children and grandchildren remember who delivered them into “fiscal slavery.”