Last week I attended an interesting forum at the University Club of Chicago. It was entitled “America’s Fiscal Futures: Making Difficult Choices.”
The forum was put on by the MacArthur Foundation and included a discussion with Dr. John Palmer and Rudolph Penner. The two speakers, who come from different sides of the political spectrum, recently co-chaired a joint National Academy of Sciences/National Academy of Public Administration committee that produced the report “Choosing the Nation’s Fiscal Future.”
The report offers U.S. leaders ways to address the nation’s rapidly growing debt burden that it says, “if unchecked will inevitably limit the nation’s futures wealth and risk a disruptive fiscal crisis.”
The committee recommended that policy makers move aggressively to restrain the growth of debt beginning in fiscal year 2012 and set as a benchmark reducing the nation’s debt to GDP ratio to 60% by 2022. Currently the ratio is at 94.27% according to USGOvernementspending.com and has grown rapidly in recent years.
It is an important issue and given that this forum was held in the middle of the week on a beautiful summer day in Chicago in a stuffy old downtown ballroom and still packed the house, is a sign that people understand its importance. The sponsors noted that 500 people responded to the invite and I only saw a handful of empty seats.
The speakers noted the highlights of the report. In an attempt to meet the 60% debt to GDP goal the committee looked at getting there with only cutting spending or by only raising revenue. The conclusion of the speakers was that regardless of your political or economic persuasion the necessary spending cuts would be too painful as would increasing taxes to meet the goal and it would be necessary to use a combination of both to get there. The report put forth two intermediate options combining higher taxes and spending cuts.
The report is a starting point and members of the committee have met with members of Congress to discuss their efforts. The important thing is to recognize the issue and keep the discussion factual.
Palmer and Penner pointed out that other countries have gone through this type of effort and come out on the responsible other side. It can happen and it must. The release after the report was finished this winter noted, “Delaying action will mean even higher levels of taxes than in the committee’s illustrative path’s, or lower levels of government services.”
It is clear that delaying action will increase the problem and decrease our flexibility.
Too often our political leaders have told us what we want to hear and left the burgeoning debt for others to deal with. Hopefully people will look at this report and understand what it means so that the next election it will not be viable for a candidate to say that he or she can cut taxes without also reducing spending or affecting the deficit; or create new entitlements without also increasing taxes or increasing the deficit.