Obama Must Scare the Hell Out of U.S. Over Debt
In 1946, as the Soviet Union moved to subjugate Europe, Sen. Arthur Vandenberg (R-Mich.) famously told President Harry Truman that he had to “scare the hell out of the American people” to get them to support aid for endangered Greece and Turkey.
On March 12, 1947, following that advice, Truman delivered a speech to a joint session of Congress that persuaded a penny-pinching, isolationist-inclined Republican Congress that America’s well-being required spending $400 million to begin fighting what became the Cold War.
In 2010, it’s clear to practically everyone who’s studied the question that America’s future is endangered by surging debt, but somebody is going to have to “scare the hell out of the American people” to get real — which means painful — action to get it under control.
At the same time, this “somebody” — President Barack Obama, for sure, but ideally some top Republican leaders, too — needs to make it clear that America can boom again if it gets its fiscal house in order.
In fact, I’d bet that a bipartisan pact to cut spending, raise revenue and reform the tax system would inspire such renewed confidence in the U.S. economy and political system that now-uncertain lenders would lend, employers would hire and foreigners would regain respect for America.
On the “scare” side, the authors of two new commission reports on the debt do use words like “unsustainable” and “unmanageable” and quote Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, as saying that it represents “the single biggest threat to our national security.”
In a breakfast meeting with reporters last week, the two co-chairmen of Obama’s debt commission used phrases such as “devastating” and “like Greece and Ireland” to describe the fate that will befall the U.S. if the debt isn’t controlled.
Former Sen. Alan Simpson (R-Wyo.) said that “if we don’t deal with the debt, the markets will do it for us. And it won’t be a slippery slope. It will be swift, and it will be disastrous.”
Such words arrest one’s attention, but are they enough to persuade the public to pressure Congress to extend the Social Security retirement age to 69 (in 2075), limit Medicare payments, cut the defense budget by $100 billion a year, cap the mortgage interest deduction at $500,000 and raise gasoline taxes?
If the latest Wall Street Journal/NBC poll is any indication, the answer is no and the case needs to be made far more vividly to the public than it has been up to now.
When voters were asked about those ideas — put forward by Simpson and commission Co-Chairman Erskine Bowles — only 25 percent said “good” and 45 percent “bad.”
Sixty percent said they were “uncomfortable” with Medicare, Social Security and defense cuts, and 59 percent were “uncomfortable” with increased gasoline taxes, limits on mortgage interest deductions and changes in the corporate tax rate.
As matters now stand, Republicans and many tea party enthusiasts seem to think that deficits and the national debt can be controlled simply by eliminating earmarks or by limiting or cutting domestic discretionary spending of the kind Congress votes on each year.
But earmarks — spending sponsored by individual Members of Congress — amount to only $18 billion a year, and domestic discretionary spending accounts for only 15 percent of all federal spending.
The lion’s share is “mandatory” spending, especially in retirement programs, plus farm subsidies. Republicans used to favor limiting Medicare cost increases, but lately they’ve become as eager to curry favor with seniors as Democrats always have been.
And they continue to be. When Simpson and Bowles unveiled their proposal, outgoing Speaker Nancy Pelosi (D-Calif.) declared it “unacceptable” because it relied too much (75 percent) on spending cuts and not enough (25 percent) on tax increases.
But according to the Congressional Budget Office, in 2020 federal revenues will represent 19.6 percent of gross domestic product — compared with the historic average of 18 percent — and spending will be 25.2 percent, whereas the historic average is 20 percent.
So what will it take to convince the public? Debt commissions make good points, but they need to make them in terms ordinary voters can understand.
For instance, as Bowles says, by 2020 interest on the national debt will be $1 trillion — more than the defense budget — and it will have to be borrowed from foreigners, chiefly China, a rival, not a friend.
Is that scary enough? How about the statement of the co-chairmen of another debt commission, former Sen. Pete Domenici (R-N.M.) and former White House budget director Alice Rivlin, about what could happen if America’s foreign creditors stop lending to the U.S.?
They said this “will increase interest rates … [and] could also send the value of the dollar plunging overseas, which could trigger runaway inflation and still higher interest rates.
“Rising debt and rising interest costs could evolve into a ‘death spiral,’ with the two feeding off each other in an ever more vicious cycle,” they said. It would be a “catastrophe.”
I think what the experts have in mind is that Americans might have to carry their worthless dollars around in bushel baskets, that unemployment would skyrocket and that, unable to invest, America’s productivity and standard of living would crater, along with its leadership in the world.
It’s scary, all right. But somebody’s got to describe it in such graphic terms as to “scare the hell” out of the nation. Obama ought to build next year’s State of the Union address around this goal.