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For the Long-Term Fiscal Health of the Nation

Sep 24, 2013
Carter Wood

As deadlines near and conflict rises over the budget and debt ceiling, Washington cannot afford to ignore long-term fiscal issues. A news and opinion round-up:

The Washington Post had a strong lead editorial today reminding the nation's leaders that the United States must deal with entitlement reform. In the published version of the paper, the two-deck headline was "Unserious Washington: As lawmakers delay a reckoning with the nation's finances, we all pay the price." Online, it was "The debt crisis deserves a serious response."

Excerpts from the Post:

CONGRESS AND the White House are gearing up for their latest epic battle — over funding the federal government for another 10 weeks . Meanwhile, their fiscal policies have put the United States on a long-term path of increasing debt, rising interest rates, needlessly crimped growth and fewer and fewer dollars for many of the programs Americans care most about....

Medicare and Social Security remain on track to crowd out other spending, slow economic growth and leave the government paying more in interest costs — 5 percent of GDP by 2038, compared with an average of 2 percent over the past 40 years. Just to keep pace, the government would have to tax more and more, or cut more and more, or both. The longer policymakers wait to address these issues, the harder it will be, not least because the interest will keep piling up.

The Post is reacting to the recently released and disturbing 2013 Long-Term Budget Outlook from the Congressional Budget Office. In one possible scenario, the CBO reports, debt could rise to 108 percent of GDP by 2038. (CBO Director Doug Elmendorf's slide presentation from his media brief is here.)

The CBO report prompted an editorial in The Kansas City Star, "Again, Congress ignores our debt":

The Congressional Budget Office calls that “ultimately unsustainable,” which is the polite way to say America is doomed unless it makes fundamental changes.

Budget officials and economists have sounded this alarm for decades, at least back to the Reagan years. Entitlement programs, particularly health care and Social Security, will demand an increasing share of total spending. Interest on the debt, too, will become a greater expense, weighing ever more heavily on future generations.

Former Comptroller General David M. Walking lays out his reform agenda The Washington Times, "Weak leaders fumble the public purse." The op-ed is full of provocative proposals responding to his basic argument:

The past decade has been a disaster when it comes to fiscal stewardship and political leadership. Our official federal debt has tripled, and the best measure of our fiscal burden — the total of federal liabilities and unfunded obligations — has soared even more, to more than $70 trillion during the next 75 years. Washington is in partisan and ideological gridlock with prospects for a fiscal “grand bargain” this year being remote, and perhaps unlikely until 2017. For the first time in America’s history, we are on course to leave future generations with a country that is worse off than the one we inherited.

More (in this case, from the conservative side of the political spectrum):

 

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