Domenici says the United States has 3-5 years to address the problem; failure to do so could have ‘drastic and dramatic’ consequences
Policymakers must address the United States’ growing debt problem now or the nation could face dire consequences, two national leaders of the debate about the issue said Thursday in Las Cruces.
The compromise legislation creates a supercommittee of 12 lawmakers charged with coming up with at least $1.2 trillion in spending cuts. The committee can add entitlement reform and revenue raisers to its deal and, because of wording in the legislation, force Congress to vote on the proposal without the possibility of filibusters and the need for a supermajority of 60 votes to pass the Senate.
In other words, the procedural rules that some have used to bog down the work of Washington in recent years won’t apply when Congress considers the supercommittee’s proposal.
“There is an opportunity to do it all now, to legislate this grand bargain,” Rivlin, a former director of the Congressional Budget Office and vice chair of the Federal Reserve, told those in attendance at the Domenici Public Policy Conference. “This is an extraordinary chance. It will take the leadership of both parties.”
“We’re asking them to be bold,” Domenici said. He added that some members of his party want the GOP members of the supercommittee to oppose any deal, but that’s the wrong approach.
“Why should we do nothing when we’re sitting here about to drown and they have an opportunity?” Domenici asked.
A serious problem
The problem is serious. Domenici, a former chair of the Senate Budget Committee, said U.S. debt has risen in recent years from around 30 percent of gross domestic product (GDP) to around 60 percent. On the current track, by 2050 the debt will rise to somewhere around 250 percent of GDP.
Domenici said we don’t know exactly what would happen if the U.S. debt reached 100 percent of GDP, but he said it would be “drastic and dramatic.” Rivlin agreed.
“If we don’t do something, it could erode our standard of living, reduce our leadership capacity in the world,” she said.
Domenici said the United States could become a “second-rate power” and predicted that policymakers have only 3-5 years to address the problem.
Domenici and Rivlin aren’t talking about eliminating the nation’s debt, which is currently approaching $15 trillion. They argue that the Unites States must reach a point where the economy is growing faster than the debt is increasing, so the debt as a percentage of GDP falls.
Spending cuts, entitlement reform and tax increases
Domenici and Rivlin co-chaired the Bipartisan Policy Center’s recent Task Force on Debt Reduction, which released a proposal for addressing the problem. Both said Thursday that the problem can’t be solved without cuts to discretionary spending, reform of entitlement programs such as Medicare and Social Security, and tax reform that ultimately increases revenue.
The bottom line: The Republican Domenici and Rivlin, a Democrat, agree that spending cuts, entitlement reform and tax increases are all necessary components of the solution.
Both were critical of anyone in either party who doesn’t acknowledge that.
Domenici called on President Barack Obama to do a better job of educating the public on the need to reform entitlement programs in addition to raising revenues and cutting discretionary spending. Rivlin called on GOP leaders to be willing to consider tax increases, and Domenici agreed.
Both said they hope to hear the president more clearly articulate the need to address all three components of dealing with the debt during the economic policy speech he plans to deliver next week.