Event Recap: CRFB Hosts 'Defining Moments in Debt'

On September 18, CRFB hosted "Defining Moments in Debt," a panel discussion at the Captial Visitor Center about the many impending "fiscal speed bumps," approaching this fall. There was widespread agreement about the severity of the upcoming debt limit and potential shutdown, as well as the unsustainablity of the budget in the long term. The panel was moderated by CNNMoney writer Jeanne Sahadi, and featured:

• Jared Bernstein from the Center on Budget and Policy Priorities
• Diana Furchtgott-Roth from the Manhattan Institute
• Jim Kessler from Third Way
• Maya MacGuineas from CRFB
• Derrick Morgan from the Heritage Foundation

The discussion focused on both problems and solutions to our looming economic problems. Derrick Morgan and Jared Bernstein talked about the causes of our current fiscal situation. Morgan stressed the threats of a large federal debt - as it hinders economic growth and restricts the options of the government in a crisis. In order to combat this threat, Morgan thinks long-term health care spending should be on the table, as it will grow rapidly in the coming years.

Jared Bernstein cautioned against too much austerity in the near term, arguing that we should be focusing on job creation right now. However, he agreed that in the medium-term, debt stabilization is essential, and in the long-term, a sustainable budget path must include a reduction in the rate of health care spending growth.

Jim Kessler, Diana Furchtgott-Roth, and Maya MacGuineas discussed possible solutions, and what they expect to see in the next few weeks. Jim Kessler argued that the key to solving this situation in the short-term is Social Security reform, which he states is the only way to obtain revenue that Republicans will support. Once Social Security is made solvent, there will be room to discuss other reform and budget discussions. Diana Furchtgott-Roth focused on growing the economy and cutting spending as a way to move forward. She cited several specific potential drivers of economic growth, including tax reform and energy and regulatory reform. She also illustrated many ways to reduce spending, including reforming Social Security, Medicare, and eliminating some government programs.

Maya MacGuineas emphasized the breakdown of budget process in talking about the current dysfunction. Instead of prudent discussions about budgetary priorities, legislators are hopping from crisis to crisis with temporary fixes. She was also dismayed at the lack of any real discussion between Democrats and Republicans as the risk of default and shutdown grows larger. MacGuineas remains supportive of a comprehensive plan that would address our long-term challenges now. She believes there is still some room to "go medium" and make some changes to the sequester and other areas to address our current crisis.

There was widespread agreement among the panelists that our country faces long-term drivers of debt that must be addressed, the sooner the better. All were dismayed at the lack of progress and foresight on Capitol Hill, and concerned that there has been a lack of serious focus on how to address these upcoming deadlines. Encouragingly, the panelists described plans that they believed could get support and address both short- and long-term concerns. There was agreement that a plan for fiscal sustainability should be reached as soon as possible, even if spending cuts and revenue increases were phased in later. Even with some disagreement over the size and scope of revenue and spending changes, the entire panel concurred that shifting from crisis to crisis placed too much emphasis on short-term challenges, and not enough on the long-term changes we need in order to ensure the health of the economy going forward.