The outlook for the Debt-Paying Generation - those young Americans on the hook for our monstrous national debt - keeps getting worse.
Take two developments in just in the last two months: First, the Congressional Budget Office released an update showing that since last year the amount of debt it expects America to carry (as a percentage of GDP) in 2035 has jumped significantly.
Second, Senate Majority Leader Harry Reid and House Speaker John Boehner each made it clear that they think cutting less than 10 percent of spending over the next 10 years is a responsible way to govern.
The CBO report continues a long series of annual warnings that the fiscal future is getting steadily grimmer: "Debt held by the public is now projected to grow even faster in the next decade under the alternative fiscal scenario than CBO projected last year. ... By 2021, it would exceed 100 percent of GDP, 10 percentage points higher than projected in 2010. In later years, debt would follow a path similar to what CBO projected last year, reaching almost 190 percent of GDP in 2035, effectively the same level as projected previously."
As columnist Peggy Noonan noted some months ago, part of the reason for the existence of the tea party is that compromise in Washington is often between moderates and liberals, not liberals and conservatives.
For example, the CBO said the initial phase of the Boehner compromise would take the debt per worker in 2021 from about $161,631 to about $156,324 - clearly, laughably inadequate. As one of us once wrote, "You can't balance the federal budget and stay inside today's policy lines. Rethink the lines, however, and you'll be amazed how quickly we could move toward fiscal sanity. It's all a matter of those tricky lines."
Thinking outside the lines is just why we are writing a book about the Debt-Paying Generation. It's also why Bill Beach was a lead author of a recent Heritage Foundation report on a plan to return to a balanced budget.
In that plan ("Saving the American Dream"), Heritage called for achieving permanent budget surpluses by 2021; pro-growth tax reform; and entitlement reform. While there is plenty of room for debating how we get to permanent total budget surpluses, the fact is that we need real solutions - and fast.
Heritage's plan is but one answer, but it is one that can work.
Unfortunately, except for rare exceptions such as Sens. Tom Coburn, R-Okla., and Rand Paul, R-Ky., both of whom have plans that would balance the budget sooner than anyone else on Capitol Hill, much of Washington would rather pay attention to the latest Washington sex scandal than worry about the real threat that is America's growing national debt.
When it really comes down to it, the budget debate can be reduced to the following points:
1. Reform our immoral and inefficient tax code, perhaps by replacing it with a flat expenditure tax, such as Heritage proposed. A strong period of economic growth will be needed to help lift us out of our fiscal mess, and the flat expenditure tax frees the economy to grow at its potential while supplying government with the revenues it needs.
2. Cut spending. To start, basically anything ending with "Department" or "Administration" should be closely scrutinized for need and effectiveness. Doubtless hundreds of billions in outlays each year could be saved by reforming broken programs and eliminating those that simply don't work. Entitlements, of course, must be reformed.
3. Shrink the size of government employee rolls. Fully one-sixth of America's workers are employed by some level of government, and when one adds the millions of defense and other contractors into the mix, more than 30 million people are employed by tax dollars. These are dollars that, instead of expanding the economic pie or tax revenue are simply recycled. We support cutting 10 percent of all government employees or contractors, to start.
As James Agresti recently noted in The Daily Caller, the longer that Americans bury their collective heads in the sand, the more extreme solutions will have to be. Today's seniors and near-seniors could have supported minor increases in retirement ages; partial or full privatization; or any of a number of other options 20 years ago to entitlements that would have made Medicare and Social Security better off today and in the foreseeable future. They could have voted for politicians who wanted a fair tax code instead of one riddled with special-interest loopholes.
Instead, the status quo was largely kept in place. Now solutions must be drastic if we are to prevent the Debt-Paying Generation from bearing the consequences of the decisions of their parents and grandparents.
About the writers
William Beach is director of the Center for Data Analysis at The Heritage Foundation. Dustin Siggins is a former policy researcher in the Center for Data Analysis at Heritage. Readers may write to the authors in care of The Heritage Foundation, 214 Massachusetts Avenue NE, Washington, D.C. 20002; Web site: www.heritage.org. Information about Heritage's funding may be found at http://www.heritage.org/about/reports.cfm.
The good news out of the debt debate is that Washington is now debating how much we can cut instead of how much we can spend. The American people deserve all the credit for forcing that change. Unfortunately, it’s still all talk in Washington. This deal is a victory for politicians but a defeat for families.
In spite of what politicians on both sides are saying, this agreement does not cut any spending over 10 years. In fact, it increases discretionary spending by $830 billion.
I voted against this agreement because it does nothing to address the real drivers of our debt. It eliminates no program, consolidates no duplicative programs, cuts no tax earmarks and reforms no entitlement program. The specter of default or a credit downgrade will still hang over our economy after this deal becomes law.
Politicians on both sides are misleading the country by calling a slowdown in the growth rate of new spending a “cut.” Spending will increase at a time when real cuts are necessary to make us live within our means, repair our economy and preserve our credit rating.
It is true that next year there will be a genuine cut of $7 billion when discretionary spending drops from $1.05 trillion to $1.043 trillion. But with our government borrowing $4.5 billion a day, that $7 billion is enough to fund the government for about 36 hours. And after our day and a half of restraint, spending will increase $830 billion over 10 years.
Supporters say the real savings will come when the joint committee the deal empowers makes recommendations to reduce the deficit by at least $1.2 trillion (as we increase the debt limit by the same amount). But the enforcement mechanism designed to force these hard decisions — across-the-board cuts to defense and nondefense programs — will never work. Congress will easily evade these caps. In the Senate, all it will take is 60 votes — the threshold for passing anything. Some have complained about defense cuts, but everyone in Washington knows those cuts can be avoided through supplemental or “emergency” spending bills.
I proudly served on the president’s debt commission and spent months negotiating with senators of both parties in the Gang of Six. But I took a break from the Gang of Six because we were not offering enough savings, especially in entitlements, to heal our economy. And the truth is that the joint committee is likely to be a step backward from the Gang of Six and the Bowles-Simpson commission.
I am the first to admit that, with this plan, the commission process in Washington has become a farce. The plan’s joint committee has been called a “super” committee because it is anything but.
For our country’s sake, I hope I am wrong. Nothing prevents the congressional committee from recommending deficit reduction far in excess of $1.2 trillion. For that to happen, however, both sides will have to sacrifice their sacred cows and embrace real entitlement reform and tax reform.
Experience has taught me that to achieve real savings, there is no substitute for being specific. In Washington, however, wide is the road that leads to pledges, commissions and caps, and narrow is the road that leads to cuts. That’s why I have targeted specific excesses such as the “Bridge to Nowhere” and the ethanol tax earmark. It’s why I recently released a 620-page report, “Back in Black,” that makes hundreds of recommendations and calls for $9 trillion in deficit reduction. Congress could spend a year eliminating no-brainer examples of waste and duplication, such as our government’s policy of directing unemployment benefits to millionaires.
I understand that Congress is not ready to accept $9 trillion in deficit reduction even though changes of that magnitude are necessary to heal our economy. Congressional leaders are probably correct that this is the best deal they could have gotten. The only recourse the people have, then, is to elect lawmakers who will produce better results.
I was among the first members of Congress to call for using the debt-limit debate as leverage to force spending cuts. I’m glad I did. Even though the cuts didn’t materialize, the debate informed the American people of the scope and magnitude of the problem.
The real debt crisis is not a debate that has been imposed on Washington by Tea Party activists. It is a crisis Washington has imposed on the American people through laziness, incompetence, dishonesty and political expediency. Politicians can talk all they want about how they did something to address the problem. But when the flaws of this plan become apparent, another change election will be coming.
My friend Larry Jackson of Political Realitiesposted this video of U.S. Sen. Tom Coburn (R-Muskogee) on Fox News Sunday, discussing the danger that our national debt poses to America's fiscal future. I recommend watching the interview.
Side note: I think Dr. Coburn's new beard is growing on me...
U.S. Sen. Tom Coburn (R-Muskogee) gave the following speech on the floor of the Senate yesterday.
Part One:
Part Two:
Script:
Mr. President, I hope the American people are watching Washington right now. We are at a defining moment in our country. There is not anybody in this body who does not recognize that our country is on an unsustainable course. They know it. It is well known. The world knows it. We can argue about how close we are to the debt crisis and the liquidity crisis, but no one disputes that one is coming. We just don't know when. Yet in the next 2 weeks Congress is going to make that problem $1 trillion worse.
We can say that a lot of what we are doing is the right thing to do, but what we are not doing is addressing the real issues that need to be accompanied by grownups as we look at this. What should the American people make of this? It is kind of like we are on the Titanic here in America and everybody is saying: The bar is open, we will just have a party the next 2 weeks. We are going to spend another $900 billion or we are going to set it up so that it can be spent.
I do not often agree with a columnist by the name of Thomas Friedman, but he has a column today that I think everyone in our collective body should read. It is aptly titled ``Still Digging.'' Here, he writes: Given where we need to go, this tax deal--this tax deal, opportunity scholarship deal, unemployment deal, tax holiday deal--is just another shot of morphine to a country that needs to do things that are big and hard and still only wants to do things that are easy and small. He concludes: Economics is not war. It can be win- win. So it can be good for the world if China is doing better, but it can't be good for America if, every time we come to a hard choice, we borrow more money from a country that is not just outsaving and outhustling us but is also starting to outeducate us. We need a plan.
I couldn't agree with him more. I was part of the deficit commission, taken a lot of criticism for saying we needed to have that debate on the Senate floor. I still think we need to have that debate on the Senate floor. But this body will not even agree about having a debate about having a plan.
Last week, the members of the debt commission refused to even debate the plan--the Members refused to even debate the plan in Congress. We didn't get 14 out of 18 votes; we only got 11.
I wish to congratulate Senator Durbin, Senator Conrad, Senator Crapo, and Senator Gregg for their efforts on that commission. You see, they think we need a plan. Senator Conrad had a wonderful statement about it. He said this: The only thing that is worse than being for this plan is being against it. What he was really addressing is the fact that we are not willing to make the hard choices. We will not come together and do what is best for America. What we will do is just take another shot of morphine, drink another drink on the Titanic, and hope that somehow it gets better.
The fact is, we already have a debt commission. It is called the U.S. Congress. That is why I voted initially against the debt commission. I spent 8 months, had a full-time staffer working on that commission for the last 8 months. We are the debt commission. We have to have a plan to avert the catastrophe that is in front of us.
America needs to know it is urgent. It is not something that can wait a year. We are going to have a major liquidity crisis, and we are also going to have a major interest rate crisis. Nobody knows when it comes. But the one thing we do know is that if we don't have a plan, we will no longer control our ability to get out of our problem; the people who own our debt will control how we get out of our problem.
So if, in fact, we want to hand over our responsibility in the Senate to the bondholders of the world, then we should continue to not have a plan. But if, in fact, we want to embrace the oath we were given, then we should have a plan.
As we debate over the next 2 weeks coming up to Christmas, part of that debate has to be whether we are grown up enough to recognize that the party is over and that we better start bailing water, we better form the line, the bucket brigade; otherwise, we are going to go down with the ship.
Now, people can say: You are scaring people.
That is realism. That is what is getting ready to happen to us. Mr. Bernanke cannot solve our problems in this regard. Only we can solve these problems for the American people.
Cutting spending should be the easy part of our solution. We can document hundreds of billions of dollars a year that are either wasted, defrauded, or duplicative in the Federal Government. I have given hundreds of speeches over the last 6 years outlining those things, whether it be the $5 billion the Pentagon pays to contractors for performance bonuses when those contractors do not meet the performance requirements to get the bonus or the $80 to $100 billion a year in fraud in Medicare and Medicaid. Those are facts--the fact that we pay three times as much for a motorized wheelchair as it costs. We have not done anything to address any of those issues. It is not hard to cut spending. It is hard to get the will to have a plan that recognizes that we have to keep on keeping on until we get America out of this very dangerous time period we are experiencing.
We just learned that we rank 25th in the world in math, 17th in science. Yet we have 105 different, separate government programs to incentivize excellence in science, technology, engineering, and math. This is just a tiny little example of the work we need to do. We need to have one plan. It needs to have measurements on it. We need to oversight it. Then we need to look at it the next year. Is it working? Is it effective? We have 105 sets of bureaucrats, and we have not made the headway we all know is required for us to be competitive in a global economy. Yet not once this year, not once last year, not when Republicans were in control, not when Democrats were in control, did we do the effective oversight that is necessary to get us out of the jam we are in.
Oversight is hard work. It is not easy. It requires that we actually know what is going on in the government, which is part of our oath to begin with. We have to do the work, we have to read it, we have to go to the hearings, we have to interview the people, and we have to have investigators so we know what is going on. Yet we do not do that.
I often hear from my colleagues on the other side that we need to pay for the so-called Bush tax cuts, which are really your tax cuts. The assumption is that once the money comes to the government at a certain rate, it is always going to come, and it is not yours, it is the government's.
Let's grant that premise for a minute. Let's grant the premise that it is the government's money and not the individual's. I would issue this challenge: Anyone who thinks we ought to pay for tax cuts ought to have to put up a list of programs that we ought to eliminate to pay for them. I put up, every time, when people are wanting to spend money, a list of options we can do to make it to where we do not increase the very problem holes we keep digging in.
The fact is, the body is not interested in cutting spending, and the proof is what we did last year. The very same people who claim we need to pay for the tax cuts uniformly voted to override pay-go to the tune of $266 billion last year, just in this last year--not this whole Congress, just this last year.
So what we need to do is move away from that rhetoric. The problem is too big for us to take pot shots at each other on what we think is a political point. And we need to get down to the real business of having a plan that gets this country out of the very real difficulties we face. The very fact that we do not know when the problem is coming, the very fact that we cannot control our own destiny unless we start taking action now should give us all chills, that we are about to be the Senate, the Congress of the United States that allowed this to happen.
We cannot let that happen, no matter what our positions are. The only way we get out of the hole we are in is if we make shared sacrifices. That means political sacrifices. That means position sacrifices. That means monetary sacrifices. That means sacrifices against our wish list. It means we all have to sacrifice.
Some people say it is suicide to tell the American people they have to sacrifice. I adamantly disagree with that. They are grown up. They get it way ahead of us. They have already seen what is happening to us. They are feeling it now. They have this innate sense that we are disconnected from the very real problems they are seeing. They are ready to do their part.
I will borrow a line from someone far more eloquent, J.F.K. I remember; I was in high school.
Ask not what your country can do for you, but ask what you can do for your country.
It was a great statement then. It is more appropriate now than ever.
What does a shared sacrifice mean? It means that if you live in this country and make a decent income, you need to be more responsible with your health care and retirement than you are today. If you have gamed the system to get disability benefits or workmen's compensation, sorry, your free ride is over. If you are receiving a special tax break because you have a good lobbyist, you are going to have to give that up. If you are a defense contractor, you might only get a bonus for doing exceptional work, not standard work, not for just showing up to work. And if you are a politician, it might mean you have to lose an election to do what is best for this country.
If we think about what is required and how we would achieve real change, we have two truths in tension: One, we have a government we tolerate; two, the American people have the power to change that government.
We can solve all of the difficult challenges before us, but we can't solve them if Washington will not even debate the problem. And if we can't overcome our courage deficit, the American people have a responsibility to replace us all--to replace every one of us.
Courage is having the fortitude to do the right thing for the right moral reason at the right time regardless of the consequences to you. And we lack that in our body politic today.
I know a lot of people see this tax deal as a big political victory. I do not see it as a victory at all for the country or for our side.
Actually, a former Bush staffer, Don Bartlett, is quoted as saying:
We knew that, politically, once you get it into law, it becomes almost impossible to remove it. That's not a bad legacy. The fact that we were able to lay the trap does feel pretty good, to tell you the truth.
This gentleman just ignored the magnitude, severity, and urgency of the problems that face America.
The political cynicism that accompanies this should give us all pause to think for a minute on the games that are being played in Washington. Congratulations. Somebody embarrassed somebody else.
How does making our entitlement dilemma worse by passing Medicare Part D feel? It is now up to $13 trillion in unfunded liability, and the rich get the same benefit as the poor; does that feel good? How about doubling the size of the government since 1999; does that feel good, especially at a time when fraud, waste, and abuse has doubled? Does it feel good that we have done nothing to reform Social Security in the years since people applauded in the middle of the State of the Union address because of President Bush's failed effort to fix Social Security? Does that feel good? Did that solve something or was that political showmanship? That belies the history of this body of coming together.
Our Founders created the Senate to try to force consensus. That is what the rules were all about. What we need to do, Democrats and Republicans and our Independent colleagues, is recognize the depth and magnitude of our problem right now. There needs to be a great big time out. Who cares who is in charge if there is no country to run that can be salvaged? It doesn't matter.
Economists worldwide and some of the brightest people at Harvard and MIT, the University of Texas, Pennsylvania, they don't sleep at night right now. They know we are on the razor-thin edge of falling over a cliff.
The fact is, both parties have laid a trap for future generations by our inaction, our laziness, our arrogance, and a crass desire for power. We are waterboarding the next generation with debt. We are drowning them in obligations because we don't have the courage to come together and address or even debate a real solution.
The reason I voted for the deficit commission report? It had a lot of stuff in it I absolutely hated. It had one thing in it Oklahoma can't tolerate that will have to be changed. But the fact is, I believed the problem was so big and so urgent and so necessary that we ought to have that debate. We ought to make sure the American people know the significance of the problems facing us. Both Senator Conrad and Senator Durbin have taken heat. Guys on our side of the aisle have taken heat because we dared to say we should have a debate about the real problems that face this country. The special interests immediately started attacking from both sides.
That tells me we were doing some good. I often hear my colleagues assert the power of the purse when it comes to earmarking, but I never hear the same thing when we talk about trying to cut spending. The bias is to spend, not to cut spending. We are either going to do it or outside financial forces are going to force us.
Look what has happened so far this year with some other countries. In the first column of this chart, we see the debt in U.S. dollars in fixed terms. The second is what they have done in terms of government spending. In terms of debt, we, of course, lead the world, $13.8 trillion. We have France at $2 trillion, Germany at $1.46 trillion, Spain $602 billion, United Kingdom $1.47 trillion, and Canada. Every one of them froze or reduced the pay of their Federal employees. Every one of them cut their Federal workforce. Every one of them cut Federal spending by significant amounts. What have we done? A big goose egg, zero. That is what we have done. So no wonder the world does not have confidence and no wonder our business investment isn't coming in. We haven't created an environment where they would have confidence.
There is no question when the tax bill goes through we will see a bump up in confidence. When people get 2 percent more on their paycheck, we will see some bump up. But it will be short-lived.
The problem is not the tax deal but the fact that we are not addressing our real problems. We are addressing the symptoms of the problem. Does a 2-year extension give businesses, small and large, the confidence they need to plan for the future? I certainly hope so. But tax reform that had a meaningful effect on future capital investment would do a whole lot more. The problem is, we are not even willing to consider the hard choices. We will not even have an honest debate about a debate about hard choices. We just want to take our shot of morphine and go on down the road, have another martini on the deck of the Titanic.
The history of our country, at least what I saw growing up from the 1940s to the 1950s, the 1960s and the 1970s, was that our Nation thrived because we always embraced the heritage of service and sacrifice when our future was at stake. We actually have seen some of that in the last 10 years. I challenge my colleagues to go to Gettysburg or Philadelphia or visit ground zero and ask: What went through the minds of the brave young Americans when the doors of their landing craft opened on Omaha Beach? What motivated the heroes on flight 93 on 9/11 when they stormed a cockpit occupied by terrorists? What did our Founders think when they signed the Declaration of Independence, knowing their lives and fortunes were on the line? They were thinking about the future. They were making that critical decision to have courage in the face of adversity and take with it what may come. But they knew doing the correct and honorable and right thing was more important than their reputation or any other thing they had.
Here is what one of our Founders thought. Almost 234 years ago, on December 19, 1776, Thomas Paine was contemplating the great and uncertain struggle that lay ahead in our battle for independence and freedom. He said: ``If there must be trouble, let it be in my day, that my child may have peace.''
At the time of Christmas and Hanukkah, isn't that what we want for those who follow, peace of mind to not be threatened by what we have set up as an unsustainable debt dungeon?
I think we ought to have it in our day. Let it be our day. Let it be today. Let it be started with this debate we will have on the tax bill that will come before us. Let's make the effort to come to a consensus that we have to have a plan. It doesn't have to be my plan or the plan of Senator Bennet, but we have to have a plan. We have to signal to the rest of the world that we are willing to start making some of the appropriate sacrifices and generate the austerity that will allow us to continue this wonderful experiment. We are now facing the most predictable crisis in our history. We are doing nothing to avert the catastrophe, nothing, zero. In fact, we are still digging. It is time we stopped digging.
How will we be remembered? As a generation of politicians who saw a gathering storm and took action or a generation of politicians who put off the hard choices of honor and dishonored the sacrifices of our past?
We do have a choice. We can choose to come together and work to solve this problem in the very short term that will have a tremendous impact in the long term. What we don't have is a lot of time. As I heard somebody say today: Time fritters away so fast in Washington. It goes by so fast. We are all so busy. There is no problem in front of us in any committee, on any issue that is greater than the problems facing this country. We need to come together across the aisle to put a plan together that will give security to not only the generations that come and are here already but the peace of mind to know we are listening, we understand, and we are willing to make and lead by example in the sacrifices that have to come for us to solve the problems.
