Deficits and Debt

Report: CBO’s Long-Term Budget Outlook

Download this document

 Correction: This paper originally stated that the Social Security trust fund is projected to be exhausted in 2033. The combined Social Security and Disability (OASDI) trust funds are actually projected to be exhausted two years earlier, in 2031.

Op-Ed: Reason to Hope for Fiscal Sanity

The Hill | September 17, 2013

For more than a decade, I have dedicated myself to sounding the alarm about our government’s fiscal mismanagement and promoting a change in course to preserve the American Dream for future generations. Now I am ending my full-time efforts so others can take the lead, especially younger Americans who have the most at stake.

The task ahead will be challenging, but based on what I’ve seen and heard, especially in my travels to all 50 states, we have more reason for hope than despair. Here’s why:

We the People are in charge.

Today we have a government that is neither representative of nor responsive to the American people. That can change if Americans insist on accountability and punish unduly partisan and ideological politicians in the voting booth.

The truth is, President Obama—like President Bush (43) before him—has failed to use the powers of his office to champion responsible reforms to the American people. And our leaders on Capitol Hill, both Republican and Democrat, have shown an appalling lack of courage in standing up to the extreme wings of their parties. As long as Republicans kowtow to those resisting any increases in revenue—despite a tripling of our national debt in the last decade—and Democrats knuckle under to those refusing to rein in the unsustainable costs of our social insurance systems, we will remain in political gridlock.

More than anyone else, I have gauged the will of my fellow citizens when it comes to fixing our government’s financial mismanagement—most recently in a nationwide bus tour through 27 states last fall. Their verdict could not be clearer. In gatherings across the country, with participants of every political stripe, we obtained 92 percent agreement on six key principles to guide a fiscal “grand bargain.” The reforms should lead to economic growth, and be socially equitable, culturally acceptable, mathematically accurate, politically feasible, and able to achieve meaningful bipartisan support.  When we discussed specific reforms, most conservatives and liberals were willing to put aside ideology as long as proposals were deemed to be fair and part of a comprehensive plan.

That tells us that politicians in Washington can gain the public support they need for bold reforms as long as they explain our urgent need to act and then lay out responsible positions. I am convinced that over time political courage and leadership will be rewarded—and cowardice will be punished.

More policymakers are focused on the issue.

There is a growing roll call of present and former government officials who recognize the need to achieve a fiscal grand bargain. During Comeback America Initiative's (CAI) tour last fall, which engaged Americans on our nation’s deteriorating financial condition, we had the explicit support of, among others, two former chairmen of the Federal Reserve, two former chairs of the RNC and DNC, former directors of the Office of Management and Budget, and a who’s who of former governors, senators and representatives from both parties.

It is also clear from recent news reports that President Obama and Speaker John Boehner (R-Ohio) would like to strike a deal on a grand bargain. An increasing number of members are also acknowledging the reality that the status-quo is unacceptable and unsustainable. Hopefully, we will reach the tipping point where enough politicians in Washington will put the good of the country before the next presidential election.

More organizations have joined the cause.

CAI has been far from alone in its efforts.  The Concord Coalition and the Committee for a Responsible Federal Budget have pushed for fiscal responsibility for a number of years, and now they are joined by newer organizations like Fix the Debt, the Peter G. Peterson Foundation, and The Institute for Truth in Accounting.  The group No Labels is pushing for a new politics of bipartisan problem-solving, and the Government Transformation Initiative is a coalition of corporations, non-profits and others dedicated to changing the way government does business. There is even a Millennial-led organization, The Can Kicks Back, which is mobilizing young people to fight for their fiscal future. The grassroots efforts of these and other organizations, coupled with the pressures they’ll bring to bear in Washington, will augur well for our future.

Clearly the hole we have dug ourselves is deep, and getting deeper, and our political system is badly broken. But I am hopeful about our ultimate prospects for success. We the People have awakened, and Washington is slowly waking up, too.  If we act boldly and responsibly, our best days will surely lie ahead.

Op-Ed: Now or Never on Debt Issue

The Hill | September 9, 2013

After an August in the countryside or their states or somewhere around the world or Martha’s Vineyard, the president and the Congress are back in Washington.

One hopes they are ready to govern -— because this period from now until the end of the year may be the last legitimate opportunity to do just that before the next election cycle begins in earnest.

The debate about Syria is on the center of the global stage but there is really only one domestic issue that needs to be addressed in this period: the budget and the debt.

With both the end of the fiscal year occurring and the debt ceiling needing reauthorization, it is difficult to comprehend how the issues that underlie and drive both of these events would not be taken up with fervor and a real intent to get something done.

At the center of these issues is of course the fact that we continue on the path of piling up an unfathomable amount of spending that is not paid for. The expenditure is made possible only through borrowing and passing the bills on down the line.

It is true the deficit has dropped a great deal in the last six months. It is also true that the sequester, if allowed to continue to operate, will cut that deficit even further. But no great solace should be taken from either fact, even though certainly on their faces they represent positive movement.

The fact that the deficit is down by over half from its high point is like saying that a person who has fallen off a tall building is doing “OK” when they are only halfway down.

The deficits at their present level still remain the highest in the post-World War II period. At the present rate of compounding, our debt will have tripled by the end of the decade from where it stood at the start of the Obama presidency. Our debt as a percentage of GDP will still be going up at what is generally accepted to be a bankruptcy-in-waiting rate.

Another positive sign of fiscal restraint on its face is the fact that the sequester is continuing to be executed. During the next fiscal year, which starts in October, it will begin to significantly affect domestic discretionary spending. But, it has to also be obvious that this is not the right way to get our fiscal house in order.

The sequester does save money and it does cut spending, but it does it in the wrong places, in the wrong way and at the wrong time.

The issue has never been discretionary spending. This is especially true after the almost trillion dollars in cuts put in place with the agreement reached in the summer of 2011.

The issue has always been entitlement spending and how to change the major entitlement programs so that they can be put on a glide path to sustainability, even as they still serve as a necessary safety net for seniors.

The sequester is an arbitrary, non-programmatic approach that will actually retard economic growth in the short run and most likely negatively effect revenues as a result.

Entitlement reform, such as changing the CPI calculation and the process for reimbursing Medicare costs, will actually create economic growth. It will show people that we are willing to address the real problems behind our debt and thus release all sorts of investment and economic activity.

Of course, all these points which have been made by many and which are obvious to most mean nothing if we do not have a government that functions and moves forward with answers and action.

The next few months are what could be called the “big casino” of governing.

The president either steps up and leads or his presidency ends up on a road to nowhere.

The Republican House either joins in with a constructive effort or else people will ask what is its purpose is when they are next on their way to a polling place.

As for the Senate, it just needs to get a nod, not even a verbal expression, from Sen. Harry Reid (D-Nev.) to the senators meeting in the basement that he will give them a pathway to action if they can come up with a bipartisan agreement. They can do this.

The folks are back in Washington. One presumes they came back to do something. Or is that too optimistic?

Op-Ed: Credible Debt Plan Would Boost the US Economy

Financial Times | July 23, 2013

Sir, Edward Luce says that “Simpson and Bowles are wrong about the US debt” (July 15) but he gets it wrong describing their position. In reality, Alan Simpson and Erskine Bowles are not as far off from Mr Luce as he implies. 

Mr Luce describes the debt as a “medium-term threat”, which is the position of Mr Simpson and Mr Bowles and Fix the Debt as well. Our contention is that the US should put in place now a plan addressing the debt that can be phased in over time. Such an approach would be preferable to the steep sequestration cuts that rightly concern Mr Luce. A long-term, comprehensive approach would also include tax reform and curbing healthcare and retirement costs as Mr Luce admits would be ideal.

The threat to Social Security’s solvency is not as hypothetical or as far off as Mr Luce argues. The trustees who oversee the vital programme have been warning for years that the retirement of the baby boomers will put a strain on the programme as more workers receive benefits and fewer contribute to it. As the saying goes, “demography is destiny”. The choices facing policy makers will become increasingly unpleasant the longer action is delayed. Waiting until a crisis is imminent will require harsh solutions such as across-the-board cuts for all beneficiaries, including the poorest seniors. In addition, Social Security’s Disability Insurance Program Trust Fund will be exhausted in just three years, underscoring the fact that this is not a distant concern.

Furthermore, Mr Luce’s implication that addressing the debt versus the economy is a zero-sum game is false. There’s no reason why we can’t do both. In the commission report and the plan they recently put forward, Mr Simpson and Mr Bowles stress the importance of phasing in deficit reduction gradually to avoid harming the economic recovery. Indeed, that is the reason to act now to replace the immediate austerity from sequestration with policies that will reduce the deficit over time. In fact, putting in place a smart, credible debt plan would likely boost the economy by showing markets we are serious about dealing with the long-term debt.

Ultimately, Mr Luce’s condemnation is more geared towards a US political system that is seemingly capable of dealing only with immediate crises as opposed to Mr Simpson and Mr Bowles, who are challenging the system.

Judd Gregg, Former US Senator and Co-Chair, Campaign to Fix the Debt

Op-Ed: Fixing the Federal Debt Demands a Comprehensive Approach

Arizona Capitol Times | June 10, 2013

Our federal budget is on a destructive and dangerous path. It is vital for our leaders to find a solution to our $17 trillion national debt, or the next generation of Americans will inherit a country in a deeply dysfunctional state.

If we continue down this path, America will be unable to act on promises made in the past or to invest in our future, and those in the millennial generation will be stuck with more debt, higher taxes, fewer jobs and a lower standard of living. Lawmakers need to muster political courage and begin to rebuild our fiscal house.

A comprehensive approach will be necessary to lower our federal deficit, and our leaders in Washington should take note. Such an approach means tackling the real drivers of the debt, protecting high-value investments, and asking for shared sacrifice from every American.

Non-defense discretionary spending — a category that includes funding for education, infrastructure and research — has taken the brunt of the cuts so far through measures like the sequester. All the while, programs like Medicare and Social Security — which account for nearly all the growth in future federal spending — remain untouched. Any meaningful measure will tackle both the spending and revenue sides of the equation, but we all must accept that everything will have to be on the table for broad, bipartisan compromise to take place.

We need to achieve, at the minimum, $2.4 trillion in additional deficit reduction over the next decade to ensure our debt is on a downward path relative to the economy, and this can only be done by reforming our tax system and entitlement programs.

The first step is to understand the actual size and future impact of our fiscal imbalance and how policy changes distribute the benefits and burdens not only on one generation but among all generations. Congress can do this by passing a proposal put forth by The Can Kicks Back to instate generational accounting analysis, which would show the effect of policy changes to members of different age groups.

Many of the proposals that come out of Washington do not affect middle-aged Americans since reforms are phased in. Although such proposals are politically more favorable to an influential voting bloc, lawmakers cannot ignore the burden facing the next generation. Indeed, they must not only consider this constituency’s concerns, but also invite its leaders to testify before relevant committees. Young people deserve to have their voices heard on this critical issue, as they truly have the most to lose.

If we wait much longer to address these problems, the solutions we’ll be forced to enact will only be more disruptive and more visible, as the damage will have already been done. According to the Congressional Budget Office, over the next decade, the United States will spend $5.4 trillion on interest payments on the national debt, and $847 billion in 2023 alone.

Republicans and Democrats alike share the responsibility of addressing our fiscal problems now to ensure future generations of Americans do not inherit them. Kicking the can down the road for the next generation shows that our political leaders are unwilling to take political responsibility, and we urge Arizona Sens. John McCain and Jeff Flake to lead on this critical issue.

Both of us — a member of the Arizona chapter of The Can Kicks Back and a former member of Congress from Arizona and member of the Congressional Fiscal Leadership Council at the Campaign to Fix the Debt — want to leave a legacy of prosperous fiscal stewardship for the next generation. We strive to ensure that today’s leaders seriously understand the consequences of their fiscal decisions and that tomorrow’s leaders are given a chance to weigh in on issues that will affect them in the decades to come. We urge you to learn more about The Can Kicks Back (www.thecankicksback.org) and the Campaign to Fix the Debt (www.fixthedebt.org).

Syndicate content