Election of Fiscal Conservatives Hasn’t Helped Restrain National Debt Growth

To the editor:

Now that the welcome respite provided by the Christmas season is over, we need to get back to resolving one of the two major economic issues that threaten and divide our nation—stopping the growth of our national debt.

Before this year is over, the debt will have doubled—in only the last six years! The president’s proposed budget includes trillion-dollar deficits for each of the next 10 years. Interest on the debt consumes hundreds of billions of dollars that could be used to support worthwhile programs.

Equally ominous, once interest rates are allowed to return to more normal levels, the cost of debt could easily double.

I don’t know how much debt our nation can tolerate before it becomes unsustainable, but we may be approaching that point. Our debt is nearing its previous high watermark as a percent of GDP—one that was experienced under the extraordinary circumstances of WWII.

We were able to reduce that debt to a manageable level by essentially balancing the budget for the next 30-years, while GDP increased. But we seem to no longer have the willpower to balance our budget. Watching the European “problem countries”— whose debt levels threaten the Euro and their own fiscal health —provides further evidence that our national debt is reaching its tolerable limits. Our nation’s debt, as a percent of GDP, is approaching theirs.

Despite these clear and ominous warnings, we have been unwilling to take meaningful steps to address the problem. Even with the addition, in the 2010 elections, of a large number of fiscal conservatives in the House, we have not been able to make much headway towards behaving in a fiscally responsible manner. 

A good example of our inability to forthrightly address the debt problem was on display just before Christmas, with the confrontation about extending the Social Security (payroll) tax reduction. Both parties, albeit for different reasons, favored continuing the reduction. The only real debate was whether it would be continued for two months or a full year.

The issue was much reported in the news as if the outcome would have a major impact on our current fiscal problems (it won't). In the end, because Democrats seemed happy to ignore fiscal consequences of their decision, and Republicans seem cowed by being portrayed as uncaring, the two parties struck a deal that was much less than the hype surrounding it.

The heretofore-sacrosanct Social Security program was pushed to an earlier insolvency by reducing the taxes that pay for it. Cover was provided by taxing Fannie Mae and Freddie Mac home loans (hardly a tax on millionaires and billionaires) for 10 years—to repay the two months of reduced payroll tax. The reduction in payroll tax won’t even help the worst off—the unemployed. Nor has it been shown that the $20 per week saved by a family earning $50,000 a year will make a measurable difference in job growth or unemployment.

We went through all of that angst to provide a very little short-term help to a relatively few truly needy—with an at best neutral impact on the 600-pound gorilla, our national debt.

How will we ever bring ourselves to make the much more significant and painful decisions to do what is needed to regain control of our national debt?

While reasonable men and women will certainly disagree about the ways to best manage our debt, I hope there is no disagreement about the risk of allowing it to continue to grow. We must address the debt problem now!

Russell Buckley
La Mesa