Every major federal fiscal and monetary agency has noted that the federal government has been on an unsustainable fiscal path for several years. By that, they mean that federal debt is projected to grow much faster than the economy. Now international institutions are starting to issue public statements of concern given current and projected federal debt burdens. Specifically, the International Monetary Fund (IMF) noted their related concerns this past week. These statements provide support for the adverse credit ratings actions by Fitch and Moody’s last year.
Despite the above warnings, Congress continues to authorize annual spending amounts far more than federal revenues, pass supplemental spending bills that are unpaid for, and ignore the hundreds of billions of dollars in annual fraud, waste, and abuse noted by GAO and the Inspector General community. The President continues to ignore the Supreme Court’s decision in repeated attempts to unilaterally forgive hundreds of billions in student loans which represent the largest asset on the federal government’s balance sheet. Both major Presidential candidates say they will not touch Social Security even though failing to reform this important social insurance program will result in at least a 20% across-the-board cut in benefits in less than ten years. In addition, one major Presidential candidate wants more tax cuts, and the other one wants more spending programs. None of these actions make sense given our current financial position and projected fiscal outlook.
It is time to recognize reality. The federal government has grown too big, promised too much, subsidized too many, and lost budget control. We are in a deep financial sinkhole that is growing rapidly. The status quo is unacceptable and unsustainable. Tough fiscal choices are needed sooner rather than later. We need more truth and leadership rather than rhetoric and laggardship from our elected leaders.
Most importantly, we need a President who will tell the truth and use the “bully pulpit” to achieve needed reforms. We also need a statutory Fiscal Commission that will engage the American people with the facts, solicit input, and make a package of recommendations concerning mandatory and discretionary spending reductions, and revenue increases designed to achieve and sustain a specific, lower, and reasonable level of debt/GDP by a year certain. Their recommendations should receive an up-or-down vote in the Congress. In addition, we must adopt a Constitutional amendment that will constrain the growth of the federal government and limit how much debt/GDP the federal government can take on in the future. The debt ceiling and other statutory spending constraint approaches have failed to ensure fiscal sanity and sustainability. In addition, only a Constitutional amendment can bind both current and future Congresses.
In determining the needed fiscal reforms, we need a set of principles and values to guide related public policy decision-making. The following six sensible principles and values achieved over eighty percent support from representative groups of voters.
- Pro-growth - If we grow the economy faster than the debt we can reduce our relative debt burdens over time.
- Socially equitable - We need a solvent, sustainable, and secure social safety net for those who are truly in need.
- Culturally acceptable - We are an opportunity-based society that believes the private sector is the engine of growth and innovation and understands there should be a limit on tax burdens to promote growth, maintain competitiveness, and encourage work and innovation.
- Mathematical integrity - Financial reports and fiscal projections need to be based on generally accepted principles/methods, and reasonable assumptions that are applied on a consistent basis.
- Politically feasible - Any fiscal reform package must be able to pass the House, the Senate, and gain the signature of the President.
- Meaningful bipartisan support - Any fiscal reform package must have a meaningful amount of bipartisan support to be viewed as fair today and sustainable over time.
Using the above goal-based approach and applying the above principles and values resulted in achieving 77%-97% support from representative groups of voters in connection with needed budget, Social Security, Medicare/Medicare/health care, tax, defense, government organization/operations, and political reforms. A super-majority of voters supported a 3:1 ratio of prospective spending cuts, including interest, to revenue increases. The related illustrative solutions and more are outlined in my latest book “America in 2040: Still A Superpower?” which is highlighted at www.americain2040.com.
Clearly the people are ahead of the politicians. It is important that the major Presidential candidates’ debate. They should continually be pressed on how they would address our deteriorating financial condition and fiscal outlook while assuring the long-term solvency and sustainability of Social Security. It is also important for Congress to pass the Fiscal Commission Act and H.C.R. 24, which relates to the states’ efforts to achieve a fiscal responsibility amendment, this session to prepare the way for needed reforms in the next Congress. It is time for real results rather than more rhetoric. Our collective future depends on it.