Defusing our fiscal time bomb
By A TIMES EDITORIAL
Published June 14, 2007
They call it the fiscal wake-up tour. David Walker, the U.S. comptroller general, along with economists from rival ideological think tanks have come together to deliver a dire warning about our nation's future economic health. They are traveling the country to say that if our leaders don't begin to address the entitlement liabilities we are facing as the 77-million baby boomers retire, America's standard of living is in serious jeopardy.
The numbers are truly startling. According to the Government Accountability Office, the fiscal exposure we have, including the Social Security and Medicare promises to retirees as well as our $8.8-trillion national debt, total a staggering $50-trillion. That is nearly the collective net worth of every household in the country.
If we just keep going the way we're going, our nation will be in a severe fiscal crisis sooner than you think. Presuming that discretionary spending grows at the rate of inflation and the Bush tax cuts expire as scheduled in three years, by 2040 more than 75 percent of federal revenue will go to pay for Social Security, Medicare and Medicaid. Interest payments on the national debt would soak up the rest. There would be essentially no money for anything else.
Walker and his colleagues scoff at Vice President Dick Cheney's famous quip that deficits don't matter. They do matter, and the sooner the federal government reins in spending and bolsters revenue the better off our nation will be. Unlike the past, when we primarily borrowed money from ourselves, our debt is increasingly being carried by foreign banks. Never before in our history have we borrowed so much from foreigners. This means we own fewer of our own assets and investment returns will be sent overseas rather than remain here to fuel our economic growth.
Groups at odds on nearly every other issue, such as the conservative Heritage Foundation and the liberal Brookings Institution, agree that there is no way our economy will grow its way out of this problem. Addressing these massive liabilities is going to take strong bipartisan political leadership of the sort that has been absent from Washington in recent decades.
In the near term, the expense of Medicare and Medicaid is unsustainable. The cost of these programs is far outstripping inflation and economic growth. Walker says there will have to be comprehensive reform and tough choices to sensibly ration health care.
Our nation has become too used to borrowing what it can't afford and allowing our political leaders to ignore the fiscal realities. But the next president will face some unpopular choices. The first baby boomers start to retire next year.
To raise awareness, presidential candidates in each party should devote at least one debate exclusively to this issue. It could be a roundtable discussion led by an informed moderator who won't let the candidates get away with sound bites or empty platitudes about finding more federal revenue by eliminating fraud and waste.
We should demand that our leaders tell the electorate the difficult truth and start calling for responsible approaches to protect America's economic future.