Politics Aside, Debt Fix Is Clear
Between us, we served 15 terms in Congress. We belong to different parties and now support different presidential candidates. But this toxic election cycle is no reason to delay a sensible bipartisan solution to our serious budget crisis. We made this argument on these pages one year ago, and the situation has only gotten worse.
The huge missed opportunities to pull together for the country have hurt all American families. Solving the problem is just getting harder. Since last summer, more than $1 trillion has been added to the debt. Worse yet, the White House Office of Management and Budget revised downward its projections for long-term growth, and forecast higher debt loads for every year between now and 2020. The fiscal outlook, despite cuts imposed by the Budget Control Act, is deteriorating — with a projected 76 percent debt-to-gross-domestic-product ratio in 2020, up four points from a year ago.
In at least one respect, the “fiscal gap” between the current budgetary outlook and the trajectory required to stabilize a 75 percent debt to GDP ratio by 2050, a new OECD study estimates, the United States is in a worse position than all of Europe. Including debt-plagued Greece, Spain and Italy.
Despite this continuing fiscal decline, the debate about rebalancing U.S. finances has not advanced. This is particularly disappointing because we’ve now had the template for nearly two years: It’s Simpson-Bowles, along with pieces of some other worthy plans.
The formula is simple: spending cuts, entitlement reform and changes to the tax code that bring revenue in line with the historical average of about 18 percent of GDP.
The fact that Simpson-Bowles is rooted in bipartisanship is only a plus. No party can solve these knotty issues alone or without compromise.
The Obama administration and Congress cannot continue to kick this can down the road. In the chaotic week last summer leading up to the debt ceiling agreement and Budget Control Act, the Dow Jones dropped more than 700 points, causing long-term damage to Americans’ faith in their governing institutions.
The payoff was an agreement that ensured another contentious debt-ceiling debate within 18 months and created a series of disorderly and drastic budget cuts that are a large part of the “fiscal cliff.” Only in this toxic political environment could anyone praise such a limited accomplishment as a “solution.”
These failures have left the administration and Congress with a year-end deadline to raise the debt ceiling, reach an agreement on the Bush tax cuts and avoid the sequester. Beyond a default on the debt, the Congressional Budget Office predicts that failure to avert the “fiscal cliff” scenario will likely shrink the economy by 1.3 percent in the first half of 2013.
This is a doomsday scenario — but also a historic opportunity. One year ago, lawmakers, fixated on the Congressional Deficit Spending Super Committee, dismissed calls for embracing Simpson-Bowles. The current refrain is that the election makes significant legislation impossible.
These excuses must stop. Every indicator points to another close election and divided electorate. The political climate will not be significantly different next year.
Staggering from one self-imposed crisis to the next is no way to run the government, especially when the long-term solution is so clear and the costs of inaction so high. The path to fiscal stability is the same as it will be in the next Congress.
Meanwhile, the consequences of delayed action grow as important tax cuts expire and haphazard budget cuts threaten to hollow out the U.S. military and hurt social programs. These looming crises are not separate, and it is time that the administration and Congress summon the courage to deal with them in a comprehensive manner.
It is deeply disillusioning to hear that nothing can happen before the election. Why not? Incumbents could show voters that they are finally getting things done. And surely no one wants the dreaded sequester to become a reality.
Will the next 100 days until Nov. 6 be relentlessly negative? Or could a few leaders refuse this paradigm and be game changers?
Vin Weber, a former six-term Republican congressman from Minnesota, is now a partner at Mercury/Clark & Weinstock. Jane Harman, a former nine-term Democratic congresswoman from California, is now the president of the Woodrow Wilson International Center for Scholars. They are both on the board of the Aspen Institute.
This article first appeared on Politico.