OPINION:
Total federal debt surpassed $1 trillion in 1981, and President Ronald Reagan restated his support for a constitutional fiscal responsibility amendment. When Ross Perot first ran for president in 1992, total federal debt was approaching $4 trillion, and he viewed it as a great threat to America’s future. President Bill Clinton and House Speaker Newt Gingrich heeded Perot’s warning and worked together to achieve budget surpluses from 1998 to 2001 and an actual debt reduction held by the public in two of those years.
Beginning in 2003, however, it became clear that Washington was addicted to spending, deficits and debt.
Today, the federal debt is approaching $35 trillion and growing by at least $5.5 billion a day. And this debt is just the tip of the federal financial iceberg. When you add other liabilities and unfunded Social Security and Medicare obligations, the financial hole increases to over $120 trillion and is growing faster than the economy.
The president continues to propose and Congress continues to pass federal spending bills far more than federal revenue. Congress recently passed several supplemental spending bills that were not paid for. The president wants to forgive student loans that represent the largest asset on the federal government’s balance sheet despite a Supreme Court decision stating that he has no authority to do so. Both major presidential candidates have failed to state how they will defuse this ticking debt bomb. In addition, both have stated that they will not touch Social Security.
While debt burdens are too high today, they are projected to increase dramatically based on our current path. Interest now exceeds defense spending and is the fastest-growing federal expense. Health care costs continue to be a major challenge. Mandatory spending represents 73% of direct federal spending and is rising, and when you add the $1.8 trillion in tax preferences, Congress controls only about 15% of annual spending and is shrinking. We have written a blank check for the rest.
Every major federal fiscal and monetary agency has said we have been on an unsustainable fiscal path for several years. The International Monetary Fund, major credit rating agencies and several prominent CEOs have joined the chorus. The real question is, what needs to be done to put the federal government on a responsible and sustainable fiscal path?
In addition to presidential leadership on the issue, two actions are essential to address this huge challenge. First, Congress needs to pass and the president needs to sign the Fiscal Commission Act. This bill has already passed the House Budget Committee with a bipartisan vote and deserves a vote by the full House. The bill would establish a bipartisan commission that would engage the American people and make a set of recommendations designed to stabilize debt/GDP at a reasonable and sustainable level for an up-or-down vote in Congress. Everything would be on the table for consideration by the commission.
Some people and organizations oppose putting everything on the table. For example, some want to exclude added revenue, and some want to exclude Social Security. There are several problems with their positions. First, our financial hole is so deep, our fiscal imbalance is so large, and we have waited so long to address this challenge that putting everything on the table is necessary to solve the problem in a politically feasible and sustainable manner.
Given demographic trends and rising health care and interest costs, the numbers do not work. Importantly, while everything needs to be on the table, not all things are equal. For example, a supermajority of Americans have supported a 3-1 ratio of prospective spending cuts, including interest, to revenue increases.
Regarding Social Security, we must ensure the solvency and sustainability of this important social insurance program. Failing to reform Social Security will result in 20% plus across-the-board benefit cuts in less than 10 years. This is unacceptable, and by acting sooner rather than later, we can reduce the needed changes and have more time to phase in needed reforms.
Second, we need to adopt a fiscal responsibility constitutional amendment. As far back as 1979, there were enough state applications for a Convention of States to propose such an amendment, yet Congress failed to call the convention as required by Article 5 of the Constitution. H.C.R. 24 is designed to illuminate this issue. Hopefully with light will come action by the House Judiciary Committee and the entire Congress.
We live in a great country, but we have strayed from the principles and values on which we were founded — one of which is the concept of stewardship. We need to aggressively pursue the above-referenced actions. If we do, we can stay great and create a better future for all of us. We owe it to our country, children, grandchildren, and future generations of Americans to do so.
• David M. Walker is a former U.S. comptroller general and director of the Federal Fiscal Sustainability Foundation.
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