With the announcement of Rep. Paul Ryan as the Republican Vice-Presidential nominee, and the installation of debt clocks at the Republican National Convention in Florida, the debt has been front and center this week as a topic of conversation at dinner tables and boardrooms across the country. It’s also the subject in today’s Room for Debate at NYTimes.com.
The challenges that we currently face include short term challenges such as a full fledge economic recovery and the impending fiscal cliff that includes automatic across the board spending cuts set for the end of this year, as well as longer term growth in benefits and health care costs. In today’s Room for Debate article, Fix the Debt’s Maya MacGuineas and co-founder Erskine Bowles, explain what is essential in implementing a plan substantial enough to address the escalating debt. MacGuineas notes:
The key will be to implement a comprehensive debt deal large enough to fix the problem, phased in gradually enough so as not to derail the recovery, and designed to promote economic growth through reforms to the tax code and cuts in government spending that protect productive government investments.
The upcoming fiscal cliff will soon cause the moment of reckoning. If we hurdle ourselves off the cliff, doing too much deficit reduction, too fast, and in the wrong ways, we will plunge the nation back into recession; whereas if we punt, we will surely endure further downgrades and quite possibly frighten credit markets into no longer favoring the U.S.
Perhaps the important question posed in this forum is not whether the budget deficit the nation’s most pressing problem – from Main Street to Wall Street, folks agree it is – but whether proposed spending cuts and tax increases are too risky. To this issue, Bowles says:
We should be careful not to cut too deep too soon. But failing to deal with the debt is the real risk we just plain can’t afford.
Indeed, inaction is not an option, and as Bowles has said many times, “politics gets in the way of sound policy.” Adds MacGuineas:
Those that brush off the debt issue likely haven’t done the math to understand just how critical it is. The current debt is $16 trillion and the annual deficit is around $1.2 trillion. Yes, the interest rates are at historic lows, but that’s actually a point of concern rather than comfort. The CBO projects that rates will rise back to more typical levels in the near future, adding another $700B in debt per year just from increased rates.
We know the 130,000 folks who've signed the Fix the Debt agree. Please share your input on the importance of Fixing the Debt and help us promote the Citizen’s Petition to Fix the Debt on the New York Times website here: