Progressive Views: The Debt Crisis is Real

By Kevin Henning
For the “Progressive Views” column, Boerne Star, July 29, 2023

Man holding twenty dollar bill; American flag in background
Image by Karolina Grabowska is licensed under CC-BY-NC-ND 2.0

The United States is playing Russian Roulette with our debt and our fiscal future. The current national debt is a whopping $32 trillion, almost 100% of Gross Domestic Product (GDP). The debt continues to grow regardless of which political party is in power. The Congressional Budget Office (CBO) forecasts that annual federal spending will grow from 23% to 30% of GDP over the next 30 years while revenue stays about the same at 19%. Spending on interest will exceed all other budget categories by 2051. Social Security Trust Funds will be insolvent in about 10 years and under current law, benefits are required to be reduced by 25%.

We are leaving a bleak legacy for our children who will be saddled with the ever-increasing debt. Some argue that the debt doesn’t matter and we should just print the money. One only needs to see what happened in places like Argentina, Greece, and the many other falling economies to see how inflation can destroy an economy. Simply put we have too much spending and not enough revenue. The main components driving spending are rising healthcare costs, an aging population, and skyrocketing interest costs. Rising interest costs will squeeze out essential programs and hamper our ability to respond to future economic downturns.

There are solutions and the sooner they are implemented the less burdensome they will be. If we have the will we can chart a better course leading to stabilized debt and more prosperity and opportunity for all Americans. Often folks will say our politicians don’t have the courage to confront the debt issue. Many politicians who have tried are gone, others fight on but without the will of the electorate it is doubtful if we will ever take the actions necessary to change our course. A politician’s main interest is getting reelected in the short term not doing what is best in the long run. I remember Pogo’s famous adage: “we have met the enemy and he is us.” We voters must be the catalyst to address the debt crisis.

Over time there have been many bi-partisan debt commissions. The Simpson-Bowles 2013 plan was immediately rejected by all but a few elected officials. The plan required pain for all by increasing revenue, reducing expenditures, and by tackling the haunting specter of entitlement spending. The Peterson Foundation has all the details of the still valid Simpson-Bowles plan and lots of other great information on our debt crisis.

Recently, a new nonpartisan group has emerged. The Committee for a Responsible Federal Budget (CRFB) believes that the debt is on an unsustainable path. They are promoting sensible tax and spending policies that will promote economic growth and restore opportunity for today’s workers and future generations. CRFB also strives to address the division, distrust, and dysfunction threatening our democracy. Democrat Erskine Bowles and former Republican Senator Alan Simpson are on the board along with many other folks from both major parties. Two of CRFB’s strong advocates are former Republican congressman and Ohio governor John Kasich and former Democratic congressman, CIA Director, and Secretary of Defense, Leon Panetta. Both were heavily involved in the budget process when in Congress. In a recent editorial they commended the recently enacted bi-partisan Fiscal Responsibility Act as a positive but inadequate first step towards responsible spending and debt reduction.  CRFB supports forming a new bi-partisan commission that would focus on educating the American people about our poor fiscal health. The goal would be to get the voters to give politicians the courage to take the necessary steps.  In Panetta’s and Kasich’s words: “Only when the public truly understands the problem, presented in stark unbiased terms, will they coalesce around solutions and move Congress to embrace responsible fiscal policy.”

So what needs to happen once folks are convinced we have a big problem? We must raise revenue from 19% to 21% of GDP by eliminating most deductions, exclusions, preferences, and credits. We must bring spending down (currently 23% of GDP) to revenue over the next 10 years by freezing domestic and defense spending, reforming healthcare, and putting Social Security on a solid footing by reducing benefits to the top 25% of earners. Looking at our history of tax rates we see that top federal tax rates have come down from 91% in 1960 to the current 37%, so yes the wealthiest among us can and should pay a bit more. This is tough medicine and I don’t see anything here that I like but it represents a possible and necessary plan for our future economic survival.

To learn more, check out the Kendall County Democratic Party website:

Kevin Henning is a local Democrat and pragmatic progressive.

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