If Washington won't do it, then 'We the People' will have to force action on the debt
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Washington has been disappointing on many levels during the past 12 years, but fiscal stewardship has to top the list.
Pittsburgh native and former Treasury Secretary Paul O'Neill and I took some heat in the early 2000s for publicly asserting that President George W. Bush's tax cuts would worsen our financial mess and by blowing the whistle on the federal government's irresponsible spending at the expense of future generations. These were early warning signs of a fiscal iceberg on the horizon, but politicians in both parties didn't listen and kept steering the ship of state straight toward it.
In 2003 alone, our federal government made decisions that we will be paying for over many years to come: It waged two undeclared and unpaid-for wars and it expanded Medicare to cover prescription drugs, adding another $8 trillion to that program's already huge unfunded promises.
During recent years, our state and local governments have grown closer to fiscal chaos due to their own spending growth and unfunded promises, such as pension plans and retiree health care programs. As a result, many of the nation's governments today are on burning financial platforms, with less and less time to rescue themselves from a full-blown crisis.
Perhaps we need to learn some lessons from what Pittsburgh experienced just a few short years ago.
This city was on its own burning platform when, in 2004, it was declared to be "financially distressed" and put under the watch of an oversight board. Unlike Washington, Pittsburgh took some responsible action by accelerating efforts to diversify its economy. The city reduced its debt by $250 million, approved only pay-as-you-go capital projects and saw its bond ratings improve. It ended the last fiscal year with a fund balance. Pittsburgh still has plenty left to tackle, including unfunded retirement obligations, but the city successfully addressed its immediate fiscal challenge.
Contrast this with the response of the federal government, which has been pouring gasoline onto the burning platform.
The nation's total debt has grown from $5.6 trillion in 2000 to more than $16 trillion today -- which is larger than the entire U.S. economy. (In terms of personal budgets, that's a 100-percent unsecured debt-to-income ratio.) Our total federal liabilities and unfunded promises (e.g., Medicare and Social Security) have grown from $20.4 trillion in 2000 to about $70.4 trillion today, and that number is growing by about $10 million a minute!
It's time for our elected officials to face the facts and start making tough decisions. It will require political courage to tackle our costly social insurance and other retirement programs, control health care costs, cut defense spending and engage in comprehensive tax reform that will, among other things, generate more revenue. We can do these things only if our president provides extraordinary leadership and members of Congress pursue nonpartisan options that can gain bipartisan support.
More than anything, it might take "We the People" demanding that our representatives get serious about these problems or make way for people who will. This is why the Comeback America Initiative is taking to the road this month with a "$10 Million a Minute" bus tour to swing states and key districts across the nation, engaging voters on a range of sensible solutions to douse the fiscal fire.
A number of common-sense reforms have already been proposed and supported by Democrats and Republicans alike. For example, we'll be discussing bipartisan ideas such as "no budget, no pay," which would stipulate that if Congress fails to pass a budget and required spending bills by the end of a fiscal year, its members would not get their paycheck until they fulfilled this basic responsibility.
We'll talk about specific reforms to our major social insurance programs, such as changing current benefit and premium formulas to provide greater support to lower-income individuals. We'll review ways to reduce health care costs, such as changing how we pay for medical care -- moving away from fee-for-service and towards "outcomes-based" payments -- and reforming our medical malpractice system. We'll explore how to reform our tax code to make it simpler and fairer while generating more revenue by closing tax loopholes.
In turn, voters can decide for themselves which candidates for federal office are proposing sensible solutions and which ones are spouting hot air. After all, "We the People" are the only oversight board the federal government has, and there is something called the ballot box that we must use to show we are serious.
If we cast our votes wisely, supporting the best candidates irrespective of party label, we can ensure a better future for our children and grandchildren. We can also keep America great and preserve the American Dream for generations to come.
First Published September 10, 2012 12:00 am