It's rare that those of us concerned about the nation's fiscal course come bearing good news. The federal debt, after all, is as high as it has ever been in the post-1945 period and is growing uncontrollably. Under our best projections, the debt will grow from nearly 65% of gross domestic product today to over 90% by the end of the decade — a level that experts have warned could have dangerous economic consequences.
If Washington, D.C., were a sovereign country, much of its GDP would consist of exports of paper, in the form of plans for the future of Social Security. Whether offered by liberals or conservatives, almost all of the proposals for Social Security are doomed by political realities that the authors of these plans refuse to acknowledge.
The winners were announced yesterday during their “The Human Side of the Fiscal Crisis” event, which featured a very elevated and constructive discussion. I listened to most of the event while at my desk (which you can too). For me, the presentations collectively reinforced the importance of shifting the current focus away from spending cuts toward identifying ways to increase revenue. It seems clear that will need a bigger pie in order to meet our responsibilities to each other as a society. This includes being able to provide a reliable safety net to assist those who need help but it’s also a precondition for the types of investments in education, infrastructure, and research that will determine our future prosperity.
Now, I’m a firm believer in responsibility. If we can find waste, fraud, and abuse in federal spending, let’s start by cutting that out of the budget. I’d like us to get a handle on long-term health care spending and bend the cost curve. I think the Pentagon's budget should assessed and probably reduced. But I also believe there is an imperative to increase the revenue side of the ledger. Almost all of the fiscal commission plans that approach this topic credibly recognize that some new source of funding will be part of the solution. I welcome the discussion as to whether this should be a value-added tax, a financial transaction tax, a carbon tax, or the simple gas tax. We should be focusing on these options and ways to ensure they can be implemented progressively so the burden is fairly distributed.
Here’s one of the runner ups, Anna Flaherty, that I missed out on the cash prize but I thought should have won. She makes some excellent points in a compelling presentational style. I’ve always been partial to the singer-songwriters who put themselves out there with just their guitar. But this is the first song I’ve ever heard featuring the gas tax. Well done, Anna. I'm not sure Dylan could have done much better.
If there is one thing we know in "Budgetworld," it's that the largest entitlement programs have to be reformed. Social Security, Medicare and Medicaid are growing at unsustainable levels because of the aging population and growing health care costs.
Without changes, entitlements will squeeze out other spending priorities. They will push up tax rates, and they will create a drag on the economy. Basically, they will bust the budget.
Ask not what your country can do for you. Ask what your country has done for you lately.
With apologies to John F. Kennedy, that's what concerned citizens should be doing to get their heads around the debate in Washington about the appropriate size and role of government.
Despite how riveted we are by Washington blood sports, average citizens don't always understand what "government" means. That's not because they're dumb; it's because the nature of government — especially the programs it pays for that affect most Americans — has changed drastically.
President Obama's budget was such a tremendous letdown and a massive punt, I have to wonder if part of the White House's calculation was: "Don't worry, people will forget about the budget in no time." It makes me want to start every column for the rest of the year with: "The president's budget was such a tremendous letdown and a massive punt ... "
New governors in Wisconsin, Ohio, Florida, and New York are making headlines by launching front assaults on public employee unions. They argue that there's no way to balance the budget without taking on government workers
California and its new governor appear to think differently.
Here's how it could happen: After a lot of harrumphing, the two parties agree that the fiscal situation has to be fixed and what should be achieved as a prerequisite for increasing the debt ceiling (though not necessarily how to do it). Let's say they agree that until a plan is passed to reduce the debt to 60 percent of gross domestic product by the end of the decade and stabilize it thereafter, the debt ceiling is increased only in three-month increments. So, no more punts.
President Obama is right when he says that public investments need to be a central part of the nation's economic growth and innovation strategy. Perennial short-termism has left the investment area of the budget dangerously under funded.
Unless we change course with well-targeted investments in human capital, infrastructure and basic R&D, our economy will be left at a severe disadvantage down the (crumbling) road.