At the same time he is weighing further economic stimulus plans, the president is also arguing for getting deficits under control. There is no question that the United States is on an unsustainable fiscal path. The large and growing federal debt looms over every legislative decision before Congress. This will be the case for years to come as our policymakers struggle to fund economic stimulus packages now or healthcare and the retirement costs of our aging population over the next two decades from revenue sources that will not grow nearly as quickly as those demands will. The consequences are serious for public policy, the economy, and the standard of living of the American people.
For the past year, along with our colleagues on the Peterson-Pew Commission on Budget Reform, we have wrestled with this critical issue — a federal debt that is out of control. The Commission members share a common concern: the fiscal future we leave to succeeding generations will lower their standards of living. It is our strong belief that we must take action now to prevent that from happening.
Even after the economy has recovered from the deep recession, structural deficits will remain. The debt is on course to reach levels never before experienced in the United States. While it was necessary to ramp up spending to respond to the recent sharp decline in the economy, the United States must adopt a plan to stabilize the debt immediately and take the first steps down that path very soon.
Under reasonable assumptions, debt held by the public is projected to grow steadily, reaching 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038. Before the debt reached such high levels, the United States would almost certainly experience a debt-driven crisis — something previously viewed as almost unfathomable in the world’s largest economy.
On Dec. 14, our bipartisan commission presented a report containing recommendations for how lawmakers and the administration can tackle the debt: “Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt.” In the report, we recommend: that policymakers commit to a plan for stabilizing the public debt over a reasonable timeframe; specific policies to stabilize the debt; annual debt targets with an automatic enforcement mechanism to ensure targets are met; and that policymakers commit to reducing the debt level over the longer term.
But in short, we agree that any solution must include tough choices on both sides of the budget. Both tax increases and spending cuts will have to be part of the solution so everyone has skin in the game.
The biggest factor in whether Congress can succeed in this task is political will — members of all political persuasions will need to come together and make tough choices. Promises not to raise certain taxes or reduce certain benefits only stand in the way of a realistic plan. Any meaningful effort to address our fiscal problems will have to be bipartisan. Remember the public is ahead of us on the issue of fiscal responsibility. But we all have to join forces to get the tough job done.
Congress will soon, once again, raise the country’s debt
limit so the lights can stay on through the holidays. Key senators are demanding the formation of a bipartisan fiscal
task force to deal with our fiscal problems in exchange for their votes to
raise the debt ceiling. Unfortunately, lawmakers have not yet come together in the face of international
concerns about how the United States is dealing with its debt, and with average
citizens across the country tightening their belts, lawmakers have not put together a fiscal
management plan to secure our economic future.
Lawmakers can begin now to put such a plan in place. But they can phase in the necessary revenue and spending changes starting in 2012 to allow the economy to recover and to give beneficiaries and taxpayers time to adjust to a tougher budget. Committing now to a fiscally responsible future will show our international creditors that we are serious about getting our debt under control.
Republicans and Democrats alike need to accept that they will have to cut spending and raise taxes to bring our debt down to a manageable level. Everyone should have a stake in the outcome — skin in the game, we like to say. If that happens, everyone can take the credit for leadership, and, more importantly, our children and grandchildren can reap the benefits.