America should desperately get its fiscal house in order for the people

America should desperately get its fiscal house in order for the people
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Imagine your home mortgage balance is rising faster than your income. It would be an irresponsible and unsustainable situation. Unfortunately, that is exactly what is happening with our federal budget as unprecedented annual deficits are piling up debt faster than the economy. But voters did not hear that from watching the presidential debate last night, nor has the fiscal future of the nation been a focus on the campaign trail.

Most Americans are not concerned about the large deficit and resulting high public debt that is growing faster than our total economy, which in turn must pay the growing interest bill. Why are Americans unconcerned? It is a good question. Perhaps they believe that the problem will fix itself. After all, worrywarts complained throughout the decade of the 1980s and into the early 1990s, and the deficit seemingly disappeared. Or perhaps people think that once the budget becomes truly problematic, it will be easy to fix and “just cut spending” as the bumper sticker says.

If those are the reasons, the news is not good. Start with the “just went away” explanation. Historically, the budget has blown a gasket in every major war. When each of those wars ended, the problem “just went away” due to drops in what had been very swollen defense spending. Defense spending in World War II peaked at 37 percent of gross domestic product. In four years, that fell to less than 4 percent. With budget savings like that, taming the deficit was virtually automatic. But that is not the case today, when defense spending is already only just above 3 percent.

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The deficit spiked in peace time in 1981. But it did not “just go away” by any means. President Reagan and Congress raised taxes and cut spending in 1982 and 1984, and established new budget processes in 1985 and 1987. President Bush negotiated tax increases and spending cuts with Congress in 1990. President Clinton and Congress raised taxes and cut spending in 1993 and 1997, before the budget finally balanced in 1998. Decades later, it might seem that all this just happened, but it was traumatic. President Bush then lost reelection over increasing taxes, and control of Congress flipped in 1994. According to people who opposed those changes, their effect on the federal government and the citizenry was profound.

Can we “just cut spending” to solve our trillion dollar deficits? Last year, there was more than $4 trillion of spending, so that might seem feasible. Many say that our problem is entitlements, as Social Security, Medicare, and Medicaid are the majority of spending, while the rest goes toward defense and interest payments. What about bureaucracy? The biggest concentrations of civilian federal government workers are in the Veterans Department, Justice Department, Homeland Security Department, the Social Security Administration, and the Internal Revenue Service.

In the real world, do you want someone there to pick up the phone when you have a tax question? Do you want someone to work with you when a “third party” files an income tax return under your name to claim your tax withholding as a refund? It happens much more often these days, as does people trying to claim your Social Security benefits, and solving those problems is among the most labor intensive jobs in government.

A wise auto mechanic once told me that “leaks do not fix themselves.” The same goes for the budget deficit. Look at all the things you cannot cut or refuse to cut. That is why you hear nothing about fixing the deficit on the campaign trail, while the debt rises and we run out of time. So start with what every elected policymaker should accept now. What is the absolute acceptable limit for the size of the debt as a percentage of our economy? Let the candidates and leaders in Congress agree on that. Then they must accept the responsibility to respect that limit. They owe us no less.

Joseph Minarik is a senior vice president with the Committee for Economic Development of the Conference Board. He was the chief economist at the Office of Management and Budget under President Clinton and coauthor of “Sustaining Capitalism: Bipartisan Solutions to Restore Trust & Prosperity.”