Last month a new Gallup Poll confirmed that the two greatest fears on the minds of Americans are terrorism and the national debt, the first time debt has shared that status with terrorism. Then, just last month Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff was quoted as saying he thought the level of national debt is our "biggest national security threat" (for a full report go to http://toledoblade.com/apps/pbcs.dll/article?AID=/20100710/OPINION02/7100335). At the current level of $13+ trillion and rapidly growing to perilously equal our total GDP of $14.6 trillion, this subject is beginning to gain more and more public attention. Senator Everett Dirksen who famously mused that "a billion here, a billion there and pretty soon you're talking about real money" must be turning over in his grave, as "trillion" had not even entered our budget lexicon in his day. The question is what do we do about it?
In order to answer that question, I think it is important to actually know the facts about our debt and the true threat it poses. Besides the link above, you can learn much more at two of many informative sites including http://usdebtclock.org where you can watch a dizzying array of debt clocks ticking off in real time not only the actual national debt but other debt obligations as well, and The Concord Coalition's excellent website http://concordcoalition.org which further links you to several in-depth related debt reports. In essence, while our national debt has almost tripled in less than 15 years to levels heretofore never seen, it is the speed with which it is now rising that is causing alarm, as it suggests that it may be surpassing the ability of our economy's growth to absorb such accelerating debt, particularly when coupled with the state of the world economy following the financial crisis of 2008. At the current level of some $45,000 per every man, woman and child in America, it is not rocket science to figure out that this level of debt growth is unsustainable and will plague our children and grandchildren for decades if not fixed.
So, what to do? Fortunately, an eighteen member independent and bi-partisan commission known as The National Commission on Fiscal Responsibility and Reform has been formed to study this issue and submit a report containing their recommendations to Congress by December 1st of this year for a subsequent vote. While everything is on the table for consideration, one of its co-chairs, former Republican Senator Alan Simpson from Wyoming, has no illusions for success and has even classified it as "a suicide mission for two old goats". The other old goat is Erskine Bowles, former Chief of Staff under President Clinton, who helped balance the budget in 1997, and is the current President of the University of North Carolina. Senator Simpson was a guest on NPR's Talk of the Nation program along with Ted Koppel this past April, and was very candid about the problem, possible solutions and the many challenges including rank politics. You can go to http://www.npr.org/templates/story/story.php?storyId=125461033 and hear the entire program.
In short, his view is that we got in our present predicament beginning with two unfunded wars, the first time in our history, which was then exacerbated by tax cuts. Then, there is the fact that 6% of our population pays 85% of the taxes while 43 million pay no tax at all. Add to that the sweetheart deal that taxed many of the ultra high income hedge fund gurus at the 15% capital gains rate rather than at the marginal personal income tax rate, and it's easy to see how our government pocketbook got squeezed. That's the income side. On the expense side, it's the 800-pound gorillas of Social Security, Medicare and Medicaid that have to be addressed, because even if you substantially reduce discretionary spending like education, transportation, defense, homeland security, foreign aid, and earmarks together with waste, fraud and abuse they only account for a relatively small percentage of our budget. Consequently, when Senator Simpson pledges that there will be no "sacred cows" I suspect we all recognize what three of the big ones will be.
Once you filter through these basic elements of the conversation on the national debt, what are some specific proposals that have been bantered about to solve this problem? In no particular order of importance, and with their own associated consequences, they include raising taxes, imposing a debt reduction surtax, eliminating services, printing more money, growing our way out, putting more people to work, seeking debt forgiveness and making voluntary donations to reduce the debt. That last idea actually had legs in the 1980s but lost steam when the federal government began running a surplus in the 1990s. So, short of holding out a national tin cup, what are your solutions?
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