The U.S. has spent its way into a $16 trillion national debt that is threatening its economic health. Bankrupting America's Gretchen Hamel has five principles that can help get the U.S. economy back on track.
From Townhall Magazine's December feature, "A Fiscal Fitness Plan for Washington" by Gretchen Hamel:
First, and mostly importantly, elected officials should keep their promises and listen to the voters. It’s easier said than done, but think about members of the two previous Congresses and where many of them are right now. Politicians should remember them when deciding how to vote on a bill that increases spending without offsets or gives preferential treatment to a certain constituency. Voters likely elected these politicians because they promised to make things better and change the way Washington does business. Now is time to make good on that promise and fix the problems.
Americans’ top concerns are clear from polling, skewed or otherwise. Jobs and the economy along with the debt and government spending consistently top the list. While voter concern over the economy and jobs has remained high over the past few years, concern over spending and the debt has grown rapidly—an increase of 10 percentage points since January, according to Public Notice polling. It makes sense: Americans just saw the country’s debt crest the $16 trillion mark on the promise that government spending was necessary to save the economy. The results haven’t matched the promises, so Americans are looking for a different path forward.
The next Congress cannot afford to repeat its 2010 saga: a half-hearted effort coupled with budget tricks to fool Americans into thinking spending cuts were made. By the end of the fiscal year, all the gimmicks, double-talk and baggy clothing can’t hide a growing deficit.
Take, for example, the Budget Control Act of 2011. According to Bob Woodward’s recent book “The Price of Politics,” negotiations were driven in large part by electoral concerns. Primarily, officials feared having to raise the debt ceiling before the elections. While this served as a catalyst to the negotiations, the negotiators deferred to the “super committee” to make spending cut decisions for them. As Americans now know, the committee failed. This failure is the reason the country is standing on the edge of the fiscal cliff, about to fall into a self-induced recession.
This episode is a perfect example of what passes for accountability and real work in Washington. Elected officials are so reluctant to make tough decisions that they invent absurd things like a super committee and reassure voters that things will be different this time. Meanwhile, congressional approval is abysmal. The U.S. has had four straight years with trillion dollar deficits, which has lead to a $16 trillion debt and the first credit downgrade in the nation’s history. Elected leaders need to be honest with the American people. Where does the country stand fiscally? What are elected officials doing about it?
It’s no secret where the money is going. For every dollar the U.S. spends, 19 cents goes to defense, 56 cents goes to entitlements and the rest is left for interest and non-discretionary items like education, agriculture, and other administration programs and projects. As Washington nibbles around the edges, entitlement programs continue to grow, threatening to consume most of the federal budget.
Americans want a re-energized economy and responsible federal spending. The gimmicks and half-measures aren’t working, and no one’s buying it anymore. Politicians must keep their promises.
The second prescription is for Congress to pick up where the fiscal commission left off. President Obama ceremoniously appointed the National Commission on Fiscal Responsibility and Reform to identify “policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run,” according to the commission’s website. Several months later, the bipartisan committee released a report that Obama unceremoniously ignored. This exercise only reinforced the “all for show” approach toward deficit reduction that frustrates Americans.
All that work should not go to waste. Next year, Washington would be well-advised to take another look at the commission’s report. For example, the commission did tackle some of the big political challenges facing the country’s fiscal future, like entitlements and taxes. For Social Security, it recommended some structural changes, which could also potentially be applied to Medicare. In addition, the group proposed something that isn’t popular on the Right, but must be addressed: defense spending cuts. They balanced that politically with recommendations that are not popular on the Left. Those include a reduction in student loan subsidies and federal pensions. The commission’s report gives negotiators a starting point, and, in any negotiation, that’s one of the biggest challenges.
A third task for Washington is to pass a responsible budget and stick to it. This sounds like common sense, but the last time Congress passed a budget was 2009. The last time they completed the entire budget and appropriations process on time was for fiscal year 1997. The world has come a long way in the advancements of technology since then, but U.S. budgeting appears to have regressed. Is it any wonder that the national debt has grown over 200 percent since fiscal year 1997?
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