Leslie A. Rubin and David Walker
The United States is stumbling toward a financial crisis, with recurring deficits and mounting national debt that, if not addressed quickly, will increase even further and negatively affect life in America and around the world. Our interest-bearing debt today is $34 trillion and growing rapidly. It is projected to grow to over $50 trillion in 10 years without adding new programs. This is a problem … a big problem.
Is there a solution? Yes, but the path to that solution requires us, as Americans, to educate ourselves on the issue and pressure our elected leaders in Washington to put their political ambitions aside and make productive steps towards improving the financial well-being of the country. As Sen. Mitt Romney recently said, “We need to be the generation that took action!”
How did we get here?
It is important that we understand a bit about how we got here. In the early 2000s, the U.S. debt was under control. In 2000, the total federal debt sat at 54% of the gross domestic product (GDP). That was less than the 60% that experts believe is “safe.” Today, that number has exploded to 120% and is increasing rapidly, creating the possibility of a disaster of historic proportions.
Congress is the only governmental body that can create real and lasting change. If it continues to do nothing, it is only a matter of time before we experience a major financial crisis.
Congress must control spending, reform social insurance programs (so-called “entitlements”) and simplify our overly complex tax system. To help achieve these goals, it should create a bipartisan commission, consisting of elected leaders and experts in government finances.
Today, Congress controls less than 30% of the annual federal budget, essentially writing a blank check for over 70% of the government’s direct, or so-called “mandatory,” spending each year. When you add the over $1.5 trillion in tax expenditures, Congress controls less than 15% of annual direct and indirect spending. Social Security and Medicare trustees also predict that the so-called “trust funds” — which hold nothing but federal Treasury securities that support these programs — will be empty within 10 years. Under current law, that will require significant and immediate benefit cuts to both programs, estimated to be 20% for Social Security and 11% for Medicare, with both cuts increasing over time. These programs are not sustainable in their present form, and we must tell our elected leaders that it is time to reform them, regardless of how difficult it may be. This can be done without cutting benefits to current recipients.
Fortunately, Speaker Mike Johnson has proposed the creation of a bipartisan fiscal commission, with representatives from both houses of Congress and outside experts, to recommend ways to address the impending debt crisis. The House Budget Committee has already held its first hearing on creating such a commission. This commission must conduct extensive citizen education and engagement efforts before making reform recommendations to Congress. In addition, its recommendation should receive an expedited up-or-down vote in Congress.
Last, while creating a commission to recommend possible solutions is important, we must also demand that Congress propose a constitutional amendment to ensure that current and future Congresses will remain fiscally responsible. While we understand that spending for unexpected emergencies may be necessary from time to time, such an amendment will ensure that the debt will not return to the danger zone in the future.
How are you affected?:The national debt hit a record high. Does that affect the average American wallet?
Opinion:Our national debt has topped $34 trillion. Does anyone actually have the guts to fix it?
When will the US debt bomb explode?
If our government fails to take steps to avoid a debt crisis, our ticking debt bomb will explode when we least expect it. The resulting crisis of confidence in the ability of the U.S. to put its finances in order will likely bring on a global depression.
The potential for a major debt crisis is real, and inaction spells disaster. Though it is refreshing to see that some of our leaders in Washington are beginning to acknowledge the situation, there is no time like the present to reach out to our elected leaders and tell them it’s time to get to work on this important subject. Motivating these politicians rests on our shoulders as ordinary Americans. ‘We the People’ need to understand the problem and put pressure on our representatives to take action. They will not do it without our advocacy.
Poet Maya Angelou once said, “If you’re going to live, leave a legacy. Make a mark on the world that can’t be erased.” We owe it to our future generations to leave the country in a better place, all around, than how we found it.
Les Rubin is the founder and CEO of Main Street Economics, a nonprofit dedicated to educating Americans about basic economics and the national debt crisis. David Walker, a former comptroller general of the United States, is a member of the Main Street Economics advisory board.
