Co-Chairmen of President Obama’s Debt Commission Warn of Coming Fiscal Disaster
Earlier this year, President Obama signed an executive order that created a “debt and deficit commission” that would be charged with figuring out how to deal with sky-high deficits and a steadily increasing national debt load.
With the economic crisis of 2008 fading from view in the rear-view mirror, many Americans are now worrying more about trillion dollar deficits and the staggeringly high debt load of the United States, and less about the solvency of the financial system. At the height of the financial crisis, many citizens begrudgingly accepted the fact that their country would need to commit trillions of dollars to keep the economy afloat - now that the bills are starting to come in, people are understandably more concerned about the country’s increasing indebtedness.
The commission, which is being led by Alan Simpson (former Republican senator) and Erskine Bowles (former White House chief of staff under Bill Clinton), is faced with the unenviable task of conjuring up ways in which the United States can moderate deficits and bring the national debt load under control.
The commission’s findings (which will likely call for a combination of spending cuts and tax increases) are due out later this year.
In the meantime, Simpson and Bowles are offering a bleak assessment of the country’s current fiscal position.
To start, the commission’s co-chairmen point out that the national debt load is “like a cancer”. They point out that federal revenues are being “fully consumed” by three programs: Social Security, Medicare and Medicaid. Everything else (education, etc) is being financed by “China and other countries” through debt purchases. China and Japan own over $1.5 trillion of US treasuries alone.
For those who think that the US economy can expand enough to keep up with the growing debt load, Mr. Bowles has some words for you:
“We can’t grow our way out of this. We could have decades of double-digit growth and not grow our way out of this enormous debt problem.”
Bowles may have tipped his hand as to what the commission will be including in its recommendations when he pointed to the steps that Britain has recently taken to bring its deficit under control. Britain, in addition to raising taxes in an effort to increase revenues, also imposed harsh spending cuts.
When the commission’s recommendations are released later in the year, will Washington actually pay attention and try to implement the proposed changes? What effect will the mid-term elections have on the deficit/debt discussion? Will politicians have the intestinal fortitude to implement painful (and unpopular) changes in order to save the country from a fast-approaching financial calamity?
The country is currently faced with a string of mind-bogglingly high deficits as far as the eye can see and an estimated $20 trillion national debt load by the year 2020. Can the country avoid this impending disaster, or are we already doomed?
Source: Washingtonpost.com - Obama’s Debt Commission Warns of Fiscal “Cancer”
Filed under: The Economic Meltdown