As the new House and Senate convened Thursday amid oaths to protect the nation from foreign and domestic enemies, it is worth noting that few people of political consequence are talking seriously about the need to rein in spending and shrink the annual budget deficit.
To the contrary, a portion of the federal government remains unfunded and effectively closed because the administration and Congress can't agree on a spending plan.
Not too many years ago, Republicans were pushing for frugality, and government shutdowns were threatened as tools to force cuts that would bring spending and revenue closer in line. Today, with unemployment extremely low and wages on the rise, neither party is interested in sounding a warning about a national debt that is approaching $22 trillion, or about $179,000 per taxpayer, as figured by usdebtclock.org. In the current fiscal year, the government is forecast to spend about $1 trillion more than it will take in.
Total U.S. debt, including state and local governments and household obligations (those credit cards, auto and student loans people owe) is approaching $72 trillion, or $854,805 per family.
It’s folly to think the nation can continue on this course without a day of reckoning. That day likely will produce consequences that constitute real threats to the nation. The question is who would be considered the enemy that let it happen.
Amid these neglected facts, it’s worth recalling that, in the stormy fiscal hand wringing that came after the great recession of 2008, only one effort produced a credible, dry-eyed solution to the nation’s long-term fiscal problems. In 2010, President Obama established a “supercommittee” made up of equal parts from both parties and both houses of Congress, led by Wyoming Sen. Alan Simpson and former Clinton administration chief of staff Erskine Bowles.
This group came up with a plan so practical that, for political reasons, it fell short of the votes needed within the supercommittee itself to consider the plan an official recommendation. As Ezra Klein of the Washington Post wrote at the time, “Almost every politician professes to admire it, almost none of them are willing to vote for it, and almost none of its supporters know what’s in it.”
What it contained was a series of tax increases, totaling about $2.6 trillion, and spending cuts equaling about $2.9 trillion, leading to another projected savings of $800 billion in interest.
It gradually would have raised the Social Security retirement age to 69, even as it gradually reduced benefits for the youngest workers. Farm subsidies would disappear. The military would absorb cuts. Instead of getting income tax deductions for charitable contributions or mortgage interest, those items would turn into tax credits.
Overall, income taxes would have fallen and tax deductions disappeared — the classic broadening of the tax base that many conservatives claim as the key to sound tax policy.
Why did it fail? For one thing, President Obama, who had convened the committee, refused to endorse the plan. Some said he worried Republicans would abandon it, leaving Democrats to bear the brunt of blame for the tax hikes it contained.
For another, it was chock full of the kinds of tough decisions that probably would have cost many politicians a chance at re-election.
That type of courage tends to come only during times of extreme crisis, such as when many Republicans voted for bailouts to alleviate the fiscal emergencies of a decade ago.41 comments on this story
But if the nation waits for an emergency to reform its federal spending problems, the remedies could be much more severe than anything proposed by Simpson-Bowles. The dollar could lose its place as the world’s reserve currency. Those who have invested in U.S. debt, including foreign nations, would demand higher interest rates to make up for increased risk. That would lead to inflation, unemployment and a threat to government’s ability to function or provide basic services.
Sometimes, real enemies foreign and domestic are not the kind that readily come to mind. However, they are just as threatening to national security as a foreign army or terrorists.
Simpson-Bowles was not perfect, but it was a great starting point for a discussion. Unfortunately, few in Washington today seem interested in that conversation.