In an op-ed for the Nashua Telegraph, Chase Hagaman, New England regional director of The Concord Coalition, discusses the need to enact fiscal reforms soon to rein in the rising national debt. The guest column can also be found here on the newspaper's website.
How large is $7.9 trillion?
Large enough to fund the federal departments of Defense, Agriculture, Transportation, Education, Commerce, Justice, Homeland Security, Labor and Interior for the next 10 years.
It is also how much the Congressional Budget Office projects the government will need to borrow over that time.
In other words, we are on track to borrow the entire sum of operating expenses for these federal programs. And the debt, which already tops $17.2 trillion and is higher relative to the American economy than at any time since the World War II era, will continue to grow.
But because the federal deficit is expected to decline through next year, complacency toward our long-term fiscal challenges seems to have set in.
That complacency, unfortunately, is reflected in recent actions in Washington.
Lawmakers on both sides of the aisle have shown little interest in pursuing a bipartisan, long-term fiscal reform deal this year.
President Barack Obama’s proposed 2015 budget excluded his previously suggested use of the chained CPI, a more accurate measure of inflation than the index that is currently used.
Congress recently backed away from its modest reform in military retirement benefits, and all but dismissed House Ways and Means Chairman Dave Camp’s tax reform plan. Although the plan needs more deficit reduction, it could serve as a starting point for substantive debate on tax reform.
Serious discussions should take place soon. After 2015, the CBO projects, the budget deficit will begin to rise again, nearing the record-setting level we saw in 2009. Three key drivers of the projected deficits: an aging population, higher health care spending and growing interest costs.
As millions of baby boomers enroll each year in Social Security and Medicare, more and more of the budget will be consumed to provide the same level of benefits to more people. The annual reports of the Medicare and Social Security trustees underscore that the programs are not on sustainable paths.
Moreover, a growing debt and an increase from today’s unusually low interest rates will confront the federal government with much greater interest costs over the next decade. Federal revenue, meanwhile, is not expected to keep up.
A large, growing federal debt can harm economic growth, restrict our ability to meet future challenges and increase the risk of another fiscal crisis. That is why Congress and the president must set complacency aside and focus on fundamental fiscal reforms to put the country on a more responsible path in the years ahead.
A number of bipartisan groups have proposed possible solutions. Two of the best-known are the Simpson-Bowles and Domenici-Rivlin commissions, which both suggested tax and entitlement reforms, significant changes in the defense budget, and other spending reductions. They deserve careful consideration on Capitol Hill.
Eliminating special provisions in the tax code, for example, could mean a broader base, lower rates, smaller deficits, and less taxpayer confusion.
Social Security reform options include a more progressive benefits formula, an improved inflation index, and gradually increasing early and full retirement ages. To avoid hardship for some beneficiaries, the government could provide an enhanced minimum benefit for low-wage workers, greater benefits for individuals with long-term disabilities, and a qualification-age exemption for those who are unable to work beyond 62.
You can help drive fiscal reform forward. Encourage your elected officials to confront the issues and question political candidates about their commitment to fiscal reform. Check out the “Get Involved” section of The Concord Coalition website, www.concordcoalition.org. E-mail, call, and Tweet in support of more fiscally responsible policies in Washington.
Systematic reform may be difficult and politically painful in the short term, but it can mean a stronger and more prosperous country for ourselves and future generations.