Debate: A Credible Way Out of Our Fiscal Swamp

(Dec. 3) -- Many skeptics thought President Barack Obama's fiscal commission was a pointless exercise, doomed to failure on its assignment to develop a plan to rein in the massive federal deficits that are projected for the next decade and beyond.

But today a bipartisan majority of that panel proved the skeptics wrong, and the nation owes these commission members a debt of gratitude.

They have given their approval to a sweeping set of recommendations that would strengthen our economy, repair important programs for older Americans that are now threatened with insolvency, and protect our children and future generations from being saddled with trillions of dollars in additional debt.

To do this, they had to move beyond stale partisan rhetoric to confront the difficult choices and trade-offs that elected officials in both parties have long avoided. They had to turn a deaf ear to those at both ends of the political spectrum who urged them to ignore vast swaths of the federal budget. They had to look at all the options.

They had to accept the principle of shared sacrifice. And in the end they had to compromise, with each commission member accepting some elements of the plan that they didn't like.

The need for such a comprehensive plan should, by now, be clear to everyone. Two months ago the federal government, for the second year in a row, closed the books on a federal deficit of well over a trillion dollars.

All this borrowing has added to the nation's accumulated debt, which is rapidly approaching $14 trillion. Much of this borrowed money comes from other countries, which could leave the United States vulnerable to pressures from abroad.

While much of the government's recent borrowing has been tied to the recession, we don't just have a temporary problem. Government projections show the debt snowballing in the years ahead -- even after the economy has fully recovered and military operations in Afghanistan and Iraq have been scaled back.

Two key factors will drive federal spending in the decades ahead: demographics and health care costs. An aging population will mean more Social Security, Medicare and Medicaid beneficiaries. And they will inevitably consume more health care services even as the cost of those services continues to rise faster than the rest of the economy.

Put simply: In the years ahead, it will cost the government a lot more just to continue the same services it has provided in the past. In addition, taxpayers will be spending more and more on interest costs as the debt grows and as interest rates rise above their current levels, which are quite low by historical standards.

While the federal debt may be manageable at its current level, we simply can't afford to continue adding a trillion dollars or more to it year after year for the foreseeable future. The more we borrow, the more we weaken the nation and increase the risk of a fiscal and economic meltdown. And it is grossly unfair to burden future generations with the bills we refuse to pay for ourselves.

So we must change course. The question is, how?

The commission's plan rightly calls for changes throughout the federal budget, spreading out the public sacrifices that will be required. The plan is credible because it is specific, a welcome change of pace from the vague rhetoric suggesting we need to do little more than go after waste, fraud and abuse.

While looking for long-term deficit reduction and entitlement reform, the panel also took into account the short-term need to protect the economic recovery. The plan does so in part by suggesting a one-year payroll tax holiday. In addition, enacting a plan to stabilize the federal debt and reduce it over time would help strengthen the economy because it would demonstrate a serious commitment to fiscal sustainability.

The commission majority, and particularly Co-Chairmen Erskine Bowles and Alan Simpson, deserve credit for their diligence and hard work in putting together a roadmap that offers the country at least one way out of the fiscal swamp. In addition, they provided a badly needed model for the sort of compromise and cooperation that will be needed to move the United States toward a more promising future.

Robert L. Bixby is executive director of the Concord Coalition, a nonpartisan advocate of fiscal responsibility.