April 24, 2014

Forum Panel Reviews Fiscal, Economic Challenges

  • The federal budget is an expression of our country's values. Where we choose to spend and at what levels, how and who we tax, and the borrowing we...

The country’s fiscal challenges and their impact on the economy dominated a Washington forum last week on domestic policy issues in this year’s presidential campaign.

The program, presented by National Journal and the Society for Human Resource Management, featured three panelists: Douglas Holtz-Eakin, president of the American Action Forum; Robert Shapiro, co-founder and chairman of Sonecon, and Robert L. Bixby, executive director of The Concord Coalition.

Bixby underscored the need for the country – and political candidates – to address short-term concerns about the weak economy while also laying the groundwork for credible, long-term structural reforms.

“I think the candidates have focused more on tactical issues in the short term than on addressing this long-term structural deficit,” Bixby said. The government’s structural deficits, he said, pose a larger threat to the country.

Health care costs are a key driver of the long-term budget problems. While President Obama and his Republican challenger have significant differences over health care, Bixby said, there are some similarities as well. Both, for example, hope to enhance private sector competition to help rein in costs.

Holtz-Eakin said it was “imperative to move quickly” in reducing federal deficits because high government debt was already dragging down economic growth and inhibiting job creation. The United States, he argued, is showing “the characteristics of countries that get into trouble” -- including heavy reliance on short-term borrowing and “hidden or disguised” fiscal liabilities.

Shapiro expressed particular concern that the rate of job creation relative to economic growth had declined in the last decade compared to the 1980s and 1990s – not because of policy mistakes but because of how the U.S. economy has evolved. “The question is, How do we address that?” he said.

Shapiro and Holtz-Eakin differed sharply over the President’s record and positions on fiscal and economic issues. Shapiro said Obama had presented a fairly detailed deficit-reduction plan while Holtz-Eakin complained that the President’s plans for a second term were a mystery.