The nonpartisan Congressional Budget Office (CBO) has issued a strong warning. Its newly released 2015 Long-Term Budget Outlook shows the national debt on an unsustainable path that will stifle economic growth and weaken the long-term fiscal health of the country.
The Social Security Trust Fund will be exhausted by 2029, which will require action to avoid drastic, across-the-board cuts for all beneficiaries. Medicare and Medicaid face similar challenges. Unless we act, federal spending on major retirement and health care programs, together with interest on the debt, will crowd out productive investments in research and development, education and infrastructure —leading to a slower economy with fewer jobs and stagnant wages, as if most of the working men and women of this country were not already suffering from that problem.
It gets worse. Higher debt means higher interest payments, not only for the government but also for average Americans — their credit card payments, car payments, mortgages and student loans. CBO projects that federal interest spending on the debt will triple as a share of the budget, taking up almost one-quarter of available revenue by 2050. Simply put, We are so broke, we have to borrow the money to pay the interest on our debt.
OK, so let's admit it is hard to deal with any one of these problems. They are tough to solve. Trying to do so with some short term action may not only be akin to political suicide, it may not even work as intended. Big challenges need long-term commitments, not quick fixes, but those commitments have to be real, not just campaign promises.
There are a host of steps that we can readily take in a bipartisan fashion: Change the trajectory of retirement benefits. Americans are far healthier than previous generations. Make it a good investment for an individual to work longer if they are capable. Gradually increase the share of health benefits paid by those more fortunate. Enact a pro-growth, comprehensive tax reform that lowers tax rates and expands the base by eliminating tax loopholes. This will help raise revenues, reduce the deficit, and make the country more competitive globally.
Solve the issues we face by putting in place steady but sure changes whose impact will grow over time in a rational fashion.
It is time for members of both parties to tackle the mounting debt in a serious way and avoid the quick-fix stopgap measures that have become the new normal in politics today. What is needed now is a sensible but do-able approach that reduces the debt as a share of GDP over the longer term while also fostering economic growth.
As the CBO acknowledges, there are benefits to making changes with longer term impact now, even if those policy changes designed to reduce the deficit don't fully kick in for several years. Putting in place reforms sooner rather than later could, as the CBO notes, "hold down longer-term interest rates, reduce uncertainty and enhance businesses' and consumers' confidence," which could lead to more jobs and a more vibrant economy.
CBO makes it clear that the longer we wait to tackle the debt, the more severe the changes will need to be. The next president and Congress will have to address the issue, and there are steps policymakers can start taking to move us in the right direction.
Strengthening the nation's finances should be a top issue in the coming presidential campaign. We are living beyond our means. Do that long enough, and you go broke. When you go broke, you can't pay the rent, get gas for the car, get food for the kids. Voters know this, and they know that we have to stop before it is too late. They are frightened for their children's future.
We can no longer afford to ignore the warnings. We need to get serious, really serious.
This is a country, but it is also a family. We, this national family of ours, have to start living within our means. If your candidates do not make this fundamental promise, don't vote for them. It's your money, it's your family, and it's your country.
William Brock served as United States trade representative, subsequently as U.S. secretary of labor, and is presently is chair of the International Policy Roundtable of the Center for Strategic and International Studies (CSIS) in Washington, D.C. His email is bbrock67@comcast.net.