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Morning Bell: America's $15 Trillion Nightmare

Posted By Mike Brownfield On November 18, 2011 @ 9:29 am In Economics | Comments Disabled

This week, the U.S. national debt clock hit a nightmarish milestone: a record $15 trillion. Words can’t even begin to describe the scope of borrowed federal spending, but it is no doubt a staggering figure that has risen dramatically in the last decade and is more than $4 trillion higher than when President Barack Obama took office less than three years ago. Unfortunately, Washington does not appear poised to take action to rectify the problem, and those with their hands on the wheel are ignoring the root of the problem: spending.

House Budget Committee chairman Paul Ryan (R-WI) on Wednesday said of the news [1], “Today marks an infamous day in American history. It is the day that the national debt has surpassed the $15 trillion mark. This debt is hurting not only our economy today, but will result in our children and our grandchildren experiencing a diminished future.” Ryan is right. Future generations will be shackled by today’s debt. And Heritage’s Alison Fraser explains [2] how federal spending is headed toward a cliff of terrifying proportions:

Federal spending, at about 24 percent [3] today, is significantly over the average of 20 percent of GDP, but in a decade it will top 26 percent.  Within a generation it will reach nearly 35 percent of GDP. Before the end of the decade taxes will have recovered from their recession-driven levels and will continue to rise thereafter.

So what’s Washington doing about it? Fighting over how high to raise taxes instead of getting to the root of the problem. By Thanksgiving, the 12 members of the congressional “super committee” are required to reach agreement on a plan to achieve $1.2 trillion in deficit-reducing measures–a mere drop in the bucket when measured against America’s spending crisis. Yet even that task appears out of their grasp. Fraser writes [2] that Democrats on the committee have said no to several actions that would alter America’s crushing spending path, such as increasing the Medicare retirement age or changing in the measure of inflation used to calculate entitlement benefits, including Social Security:

Sadly, there are few additional changes on the list for them even to react to — and their so-called bold changes [4] from several weeks ago have all but dried up. The Democrats’ intractable attitude on entitlement reform defies logic.

The facts are simple: Entitlements are going to generate European style debt levels unless they are reformed. Paying for it without bringing down their spending would require constant, crushing tax hikes [5] on all taxpayers — not just the top 1 percent.

Fortunately, there are actions that Congress could take to rein in entitlement spending (which already comprises 40 percent of all federal spending), and those include bold reforms to Social Security, Medicare, and Medicaid. But the same old ineffective approaches to cutting costs of years before–like cuts to doctors, hospitals, and other providers–will cause more harm than good and should be scrapped.

And there are some in the House and Senate who understand the problem and are advocating significant action. Seventy-two Members [6] of the House and 33 Senators [7] are standing against continued overspending, over-borrowing, and overtaxing. In a letter yesterday [6] to the super committee, the House Members wrote, “It is evident that America has a fiscal crisis because Washington spends too much, not because it taxes too little,” and warned, “Increasing taxes on Americans would destroy jobs, erase all hope of an economic recovery, and simply serve to feed out-of-control spending in Washington.”

The Heritage Foundation, too, has called upon the super committee [8] to “drive federal spending down — including by fixing ever-expanding entitlement programs — toward a balanced budget, while preserving our capability to protect America, and without raising taxes.” And Heritage vice president David Addington writes [6], ”The super committee has a chance — one chance — to get it right.  More taxes means more government and a worse economy.  The super committee should recommend legislation that rests on three pillars [9]: (1) cut non-security spending, (2) maintain defense capabilities, and (3) do not hike taxes.”

There are 15 trillion reasons that show how deeply America’s fiscal house is in disorder, and there are 12 members of the congressional super committee who can propose a solution that helps the country turn the corner without raising taxes, without weakening our defense, and without burdening future generations. But getting there will require serious leadership, action, and an understanding that doing business as usual will not bring this nightmare to an end.

Reminder: Next Tuesday, November 22, at 8 p.m., The Heritage Foundation and the American Enterprise Institute are co-hosting a GOP presidential debate on national security and foreign policy [10], broadcast on CNN. Click here for more information. [10]

Quick Hits:

  • LUNCHTIME CHAT: Join us today from 12 to 1 p.m. ET [11] as we talk foreign policy in the run-up to Tuesday’s GOP presidential debate hosted by Heritage and the American Enterprise Institute on CNN.
  • Occupy Wall Street protesters failed to shut down the New York Stock Exchange as planned, but their clashes with police resulted in nearly 200 arrests and dozens of injuries. [12]
  • Congress approved a spending bill [13] to keep the government operating until December 16. Senator Tom Coburn (R-OK) voiced opposition [13] to the measure, saying, “I don’t think the American people know how badly they have been hoodwinked by the Congress.”
  • According to a new poll on education [14], 52 percent of California voters have a favorable opinion of charter schools and 48 percent say charters provide a better education. Only 24 percent consider traditional schools more effective.
  • France has called for the U.N. Security Council to act against Syrian President Bashar al-Assad. Meanwhile, Syria has agreed “in principle” [15] to allow an Arab League-proposed observer mission into the country.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/11/18/morning-bell-americas-15-trillion-nightmare/

URLs in this post:

[1] said of the news: http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=269248

[2] explains: http://blog.heritage.org/2011/11/17/supercommittee-dithers-on-tax-hikes-but-where-are-the-spending-cuts/

[3] percent: http://www.heritage.org/BudgetChartBook/runaway-spending-tax-revenue

[4] changes: http://blog.heritage.org/2011/10/28/super-committee-proposal-tax-hikes-should-be-a-nonstarter/

[5] crushing tax hikes: http://www.heritage.org/budgetchartbook/entitlements-double-tax-rates

[6] Seventy-two Members: http://blog.heritage.org/2011/11/17/72-representatives-know-what-america-needs-and-it-is-not-a-tax-hike/

[7] 33 Senators: http://blog.heritage.org/2011/11/03/33-senators-who-know-what-america-needs/?query=33+Senators+Who+Know+What+America+Needs

[8] called upon the super committee: http://blog.heritage.org/2011/08/11/conservatives-to-super-committee-think-big-really-big/

[9] three pillars: http://thf_media.s3.amazonaws.com/2011/pdf/wm3405.pdf

[10] GOP presidential debate on national security and foreign policy: http://blog.heritage.org/debate/

[11] Join us today from 12 to 1 p.m. ET: http://blog.heritage.org/2011/11/17/online-chat-on-the-foreign-policy-debate/

[12] 200 arrests and dozens of injuries.: http://online.wsj.com/article/SB10001424052970203699404577043970206021872.html

[13] approved a spending bill: http://thehill.com/blogs/floor-action/senate/194453-senate-approves-minibus-continuing-resolution-sends-to-the-president

[14] According to a new poll on education: http://www.latimes.com/news/local/la-me-poll-charters-20111118,0,5491231.story

[15] has agreed “in principle”: http://www.washingtonpost.com/world/middle-east/french-fm-says-time-has-come-to-strengthen-sanctions-against-syria/2011/11/18/gIQALy4OXN_story.html

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