July 22, 2014

Consensus Exists To Tackle Long-Term Problems

While fielding a question from the audience during his town hall meeting on credit card reform, President Obama took an opportunity to emphasize the need for policymakers to focus on restoring fiscal responsibility within the federal government:

"What I'd like to do is just shift off -- pivot off your question to talk about this issue of debt and deficits one more time. During a recession of this severity it is important, as I explained, for the government to step in and fill the hole in demand that was created by consumers and by businesses, to get the economy kick-started.

But the long-term deficit and debt that we have accumulated is unsustainable. We can't keep on just borrowing from China, or borrowing from other countries -- (applause) -- because part of it is, we have to pay for -- we have to pay interest on that debt. And that means that we're mortgaging our children's future with more and more debt, but what's also true is that at some point they're just going to get tired of buying our debt. And when that happens, we will really have to raise interest rates to be able to borrow, and that will raise interest rates for everybody -- on your auto loan, on your mortgage, on -- so it will have a dampening effect on the economy.

So we are going to have to deal with our long-term debt. As I said before, the biggest thing that we can do on that front is to deal with entitlements."

It was certainly a good sign that the President appeared willing to broach this subject during an important discussion. The town hall was focused on reforming the credit card industry and encouraging consumers to be more responsible with their individual finances. So, in many ways, the analogy to our long-term debt load -- the national credit card -- was very appropriate. Much like individuals should be prudent with their personal finances, the national government should also take accountability for its irresponsibility.

Even more encouraging is the fact that numerous leaders from both sides of the aisle are emerging to place the topic back on the public's radar. The President is not alone in his desire to address these programs. Other elected officials like Majority Leader Steny Hoyer (D-MD) and House Budget Committee Ranking Member Paul Ryan (R-WI) have both stressed that these reforms efforts are necessary.

Therefore, on the heels of a very, very, very tough fiscal week, it was encouraging to see our elected leaders expressing a willingness to stop kicking the proverbial fiscal can down the road and alter our fiscal trajectory.

--Phil Smith