Ignoring the debt will come back to bite us


It is January 2017 and you have just taken the Oath of Office as the 45th President of the United States. What are you going to do now?

“I’m going to Disney World” is not the right answer.

“Prepare my first budget” is the right answer.

Unfortunately, some of the budget proposals we are likely to see from the presidential candidates in the coming year might seem more appropriate for Disney’s Fantasyland than the Oval Office.

Spending increases and tax cuts that magically pay for themselves without adding to the rising national debt are no more realistic than a trip through the Enchanted Forest.

The way to inject some reality into the next president’s first budget is for voters to demand greater realism during the campaign. That begins here in New Hampshire.

As the candidates come through this first-in-the-nation primary state, they need to be pressed on three key questions:

  • Do you acknowledge that the debt is on an unsustainable track?
  • Will you recommend serious steps to deal with this problem in your first budget?
  • Will you work on the problem in a bipartisan manner?

In the real world, these are not high hurdles to clear. But in the world of partisan politics, they can be formidable.

The basic facts are pretty clear.

Despite some short-term improvements, the debt remains on an unsustainable long-term path. Annual deficits are projected to begin rising again in 2018, soon after the next president takes office.

The debt is already at post-World War II highs, both in dollars and as a share of the economy (GDP). It has grown from 35 percent of GDP in 2007 – about the post-war average – to 74 percent today, and is projected to exceed the entire economy by the 2030s.

Without fundamental fiscal reform, budget projections show that the next administration, if it serves two terms, will see:

  • Federal debt held by the public growing by over $7 trillion.
  • Annual deficits consistently rising, starting at $455 billion in 2017 and increasing to over $1 trillion in 2025.
  • Federal spending on major retirement and health care programs, and interest on the debt, accounting for 58 percent of spending in 2017, rising to 67 percent in 2025 – crowding out “discretionary” spending in areas such as defense, education and transportation.
  • A tax code riddled with special provisions and hidden subsidies resulting in $1.6 trillion in foregone annual revenue in 2017, an amount that will continue to grow.
  • Interest on the debt as the fastest growing category of federal spending. In 2017 alone we will spend $331 billion on interest payments, and by 2025 more than $800 billion – more than current combined federal spending on defense, education, transportation and medical research.

The next president must use his or her first budget to put the country on a different course. The answer is not simply cutting waste, fraud, and abuse, or relying only on growing the economy or raising taxes just on the wealthy.

The fundamental problem is that we have a built-in mismatch between projected revenues and benefit programs – such as Medicare, Medicaid and Social Security – that operate on autopilot. As the population ages and per-person health care costs continue to rise, these programs will steadily become more expensive. Revenues are projected to grow as well, but not by enough to keep up.

If we continue on this path an increasing portion of the federal budget will go to financing today’s spending and yesterday’s promises, rather than investing in the next generation. This will place ever-tighter constraints on the ability of future generations to determine their own priorities and to meet unforeseen challenges.

The debt does not need to be the only campaign priority, but it must be among the top priorities in order to have a mandate for action. Candidates must make clear, serious commitments to address the debt in their first budget and to work closely with members of Congress in both parties to enact that budget into law.

So will the candidates acknowledge the problem, promise to do something about in the first budget and be willing to work across party lines? They should. It’s not too much to ask.

Chase Hagaman is New Hampshire state director for First Budget, a joint nonpartisan initiative of The Concord Coalition and the Campaign to Fix the Debt. He also serves as Concord’s New England regional director.

View the article on the Nashua Telegraph’s website.

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