The United States’ debt will have drastic consequences unless policymakers take major steps to alter the current fiscal path, said the co-chairs of President Barack Obama’s bipartisan budget commission.
Erskine Bowles and Alan Simpson, co-chairs of the National Commission on Fiscal Responsibility and Reform, discussed efforts to address the federal budget crisis Wednesday in a presentation titled “Decision Time: Bowles, Simpson and the Federal Budget.” Moderated by Phil Bennett, Eugene C. Patterson professor of the practice of journalism and public policy, the discussion outlined Bowles and Simpson’s plan to balance the budget by 2015.
“I believe if Congress and the administration don’t wake up, we face the most predictable—and the most avoidable—economic crisis in history,” Bowles said. “The fiscal path we are on is not sustainable.”
Obama appointed Bowles, former White House chief of staff under President Bill Clinton, and Simpson, former senator from Wyoming, as co-chairs of the 2010 commission, which was charged with generating policies that would balance the nation’s budget. Bennett, former managing editor of The Washington Post and current managing editor of Frontline, said that Bowles and Simpson have been instrumental in drawing the public’s attention to the issue of the national debt.
Bennett noted that the country’s current fiscal situation is dire, and people must be open to unorthodox solutions.
“If nothing is done this year, an automatic system of cuts to the budget will take place a year from now in January, and those are sort of arbitrary, across the board cuts,” Bennett said. “There is an overall sense that we’re running out of time to... figure out how to make these cuts in an equitable and sensible way.”
Bowles attributed the crippling national debt to four main factors: health care, defense spending, the current tax code and interest on the national debt. He described major problems related to these four areas, noting, for example, that the United States spends more on defense than the following 14 countries combined, including China and Russia. The current taxation system is outdated and in need of reform, Bowles said.
The United States also needs to curb borrowing money from other countries, Bowles added, noting that if the U.S. does not change its practices, more than $1 trillion will be spent on interest on national debt alone by 2020.
“If you spend a buck a second from today onward, you wouldn’t reach $1 trillion for 32,000 years,” he said.
Bowles also discussed the plan’s impact on health care, noting that taxpayers should not be responsible for providing a “Cadillac plan”—a term meaning unusually expensive health insurance plan—for individuals who do not fund their own medical care.
In general, the speakers emphasized that all Americans need to make sacrifices in order to find a solution for the larger problem, which cannot be solved quickly.
“Nothing big or important ever happens in Washington all at once,” Bowles said before the event. “This is hard work. It’s tough.”
Although the Simpson-Bowles plan has received the support of four Democrats, four Republicans and one Independent on the commission, it still awaits approval in Congress and has not been adopted by the Obama administration. The final version is set to be finished by February.
The plan is gradual without major cuts planned in 2012. Certain contentious issues—such as workers’ compensation and food stamps—will not be affected substantially.
When asked by a member of the audience if they were optimistic or pessimistic about the country’s potential to solve the problem, Erskine and Bowles both said they were hopeful that a solution would be reached.
“I’m no Pollyanna by any stretch of the imagination, but I think the future of our country is very, very bright if we face our problems,” Bowles said.
Jeff Pavlak, a master’s student in the Sanford School for Public Policy, said he was critical of the plan and its proposed tax cuts.
“It doesn’t make sense in a time... when the wealthy are at a higher income than they’ve ever been,” Pavlak said. “I don’t think [Bennett] asked any difficult questions of [Bowles and Erskine’s] proposals or of their ideologies.”