The root of the national debt--the total amount of money owed by the U.S. government to its creditors--is budget deficits, which occur when the federal government spends more money than it takes in. To pay down our debt, Washington must first balance the budget and put an end to the deficit spending that administrations of both parties have made the status quo since 2000.
Calls to “cut spending” are a popular campaign refrain, but the type of reforms needed to pay down the debt aren’t even on the table right now. Politicians may pat themselves on the back for reaching “grand bargains” to reduce the deficit, but these cuts have about as much effect on the national debt as a butter knife would on an iceberg. The hyped “sequester,” for example, will cut only 2.4 percent of federal spending over the next decade, leaving the drivers of the debt untouched.
To curtail spending in a way that will allow for true debt reduction, the government needs to focus on reining in entitlement spending, which accounts for over 43 percent of all federal spending. Sadly, entitlement reform is the “third rail” of politics--because Social Security, Medicare, and Medicaid are popular with voters, politicians instinctively exclude them from any consideration whatsoever when they discuss spending cuts. Yet, at some point, Washington will face the tough choice of either touching this third rail or running off the tracks entirely. Unfortunately, there is no reasonable path to fiscal health that doesn’t involve entitlement reform, and the sooner politicians set reforms in motion, the sooner our country can get back on track.
The projections for Medicare and Medicaid are equally dire, with Medicare set to run out of money even sooner than Social Security, and the expansion of Medicaid under President Obama’s health care law already swelling budget deficits at the state level. Yet Washington steadfastly refuses to even consider changes to these programs, and House Minority Leader Nancy Pelosi is even questioning whether Medicare reform would save money. These entrenched attitudes in Congress need to shift if we ever hope to move towards fiscal sanity.
Our country’s fiscal crisis has reached a point where it’s no longer a question of if entitlement reforms are needed, but if we can come together to pass these reforms before it’s too late. The insolvency dates for Social Security and Medicaid are ticking time bombs, but politicians on both sides of the aisle are content to tout short-term “fixes” that produce nothing except talking points. The next decade may represent our last chance to reverse the growth of the debt before America joins the ranks of Greece in default. If our leaders in Congress aren’t willing to put all options on the table, we just may need to find new leaders.
Stverak is the president of the Franklin Center for Government and Public Intergrity.