Structural deficits present difficult choices

President Barack ObamaBarack Hussein ObamaOvernight Cybersecurity: What we learned from Carter Page's House Intel testimony | House to mark up foreign intel reform law | FBI can't access Texas shooter's phone | Sessions to testify at hearing amid Russia scrutiny Russian social media is the modern-day Trojan horse Trump records robo-call for Gillespie: He'll help 'make America great again' MORE should be commended for his recent executive order that creates a Fiscal Responsibility and Reform Commission. Now that the president has acted, there are several key elements that need to be considered in order to help increase the chance of the commission’s success. They relate to the commission’s goals, scope, process and additional membership.

While the president’s goal of achieving primary budget balance by 2015 is one that needs to be met, it is even more critical to establish fiscal goals designed to address our nation’s large and growing structural deficits. Over time, under today’s policies, the gap between spending and revenues will grow dramatically even after the economy has recovered, unemployment is down and the “wars” are over. Unless this is addressed it will seriously harm our nation’s economy and the standard of living for future generations.

The Congressional Budget Office’s projections show that, under the status quo and even without a rise in interest rates, the debt-to-GDP ratio is expected to increase to 321 percent by 2050. This is the real problem — the so-called “structural deficit” — that needs to be tackled. These deficits are what truly threaten the nation’s future and the longer-term welfare of the American people.

Addressing the nation’s fiscal challenges over the next several decades will require achieving a reasonable debt-to-GDP ratio that can be sustained well beyond 2015. The commission should also aim to find ways to achieve a significant percentage reduction in the tens of trillions of dollars in the federal government’s current unfunded obligations that grow by several trillion dollars a year on autopilot.

Everything must be on the table for consideration by the commission. This includes additional statutory budget controls, social insurance program reforms, additional spending cuts, tax reform, and revenue increases. Reasonable people can and will differ on the proper mix of spending, tax and other actions needed to put our nation on a more prudent and sustainable fiscal path. However, for the country to be able to make progress on multiple fiscal fronts simultaneously and for the commission to be able to achieve the required 14 of 18 votes for its package of recommendations to be voted on by the Congress, all of these elements will need to be considered.

While spending cuts and constraint are clearly the area in greatest need of attention, there is general consensus that both spending cuts and revenue increases will be necessary to put America back on a prudent course. The sad but simple truth is that Washington policymakers have procrastinated too long and promised too much to do otherwise. Solving our fiscal challenge with spending cuts alone would devastate social insurance programs so many people depend upon while also cutting investments in our future. For example, total federal spending would have to be cut by 48 percent in 2030 to “stop the bleeding” and by even greater amounts if delayed further. On the other side of the coin, solving the fiscal challenge with revenue increases alone would do serious harm to the economy and place a crippling and unfair burden on American taxpayers, especially future generations. For example, total federal revenues would have to be raised by 64 percent in 2030 and even more if delayed further.

In addition to the basic principles of math and compounding, known demographic trends and differences in degrees of political activism among voter groups mean that waiting longer to address our challenge will only serve to increase the amount of tax increases and/or spending cuts that will be required over time. Additional delays will also result in additional risk of a “super sub-prime crisis” if foreign lenders lose confidence in the ability of the U.S. to put its financial house in order. It will also result in less transition time, and a reduced ability of businesses, individuals and others to plan for the future.

Going beyond Washington’s Beltway to engage the American people will be critical to the commission’s success. In fact, its success or failure may largely depend on how effectively the commission engages in such activities. Such an “outside the Beltway” effort should communicate the facts about our nation’s fiscal challenge while simultaneously providing the public an opportunity to voice its opinions and concerns. The commission must help Americans understand the tough choices that will be required, the prudence of acting sooner rather than later, and the potential adverse consequences if we fail to act until a crisis is at our doorstep. To be effective in doing so, the related messages must be conveyed by knowledgeable and credible people who are not viewed as being partisan or ideologues.

Finally, the commission itself needs to be comprised of capable and credible individuals who are committed to coming up with nonpartisan solutions that can achieve bipartisan support. The president’s appointment of Erskine Bowles and Alan Simpson as co-chairmen was a positive step in this regard. Now that the president has made his six appointments, the Republican and Democratic leadership should ensure that they appoint lawmakers who will put aside partisan and ideological agendas and work to do what is in the longer-term best interest of the country.

A properly designed and effectively executed commission can help set the table for elected officials to act on a package of reforms that will enable us to avoid passing a fiscal “tipping point.” Passing such a point or waiting for an immediate crisis like a sudden and dramatic increase in interest rates and/or decline in the value of the dollar before acting would result in something much worse than a recession, not just in the U.S. but also around the world. We owe it to our nation’s founders and our families to do no less.

Walker is president and CEO of the Peter G. Peterson Foundation and former U.S. comptroller general.