Presidential commission to address rising national debt
Tuesday, April 27, 2010
A presidential commission will convene Tuesday at the White House to address what leaders of both parties agree is one of the greatest threats to the country's economic future: the rising national debt.
Official forecasts suggest that without sharp changes in federal spending or tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country's ability to educate its children, care for the elderly or mount a robust national defense.
Republicans and Democrats alike say the fiscal challenges have been too long ignored. But with the two parties feuding over health-care reform, Wall Street regulation and a host of other issues -- and the economy still uncertain after a deep recession -- there is considerable doubt that they could join hands to fend off a still-distant potential crisis.
"It would take a miracle," agreed Senate Majority Whip Richard J. Durbin (D-Ill.). "But," he said, "I believe in miracles."
Durbin is the highest-ranking lawmaker among a dozen members of Congress on the commission, which also includes six presidential appointees. The panel has until Dec. 1 to devise a plan to stop a federal borrowing binge that exploded during the recent recession and will only get worse as retiring baby boomers tap into federal retirement programs.
The gulf between the two parties is vast. No budget commission has managed to spur action since 1983. And a host of interest groups is lining up to rally the public against any solution that involves higher taxes or cuts to favored programs -- particularly Social Security, which members of both parties consider the ripest target for compromise. Even supporters of the commission are not optimistic: House Majority Leader Steny H. Hoyer (D-Md.), a vocal advocate, said the most he expects is "a good message with regard to the magnitude of the problem."
But panel members from both parties say the recent experience of Greece, deeply in debt and begging other countries to help pay its bills, provides a vivid incentive to set aside ideological differences and work together. "After stopping a terrorist with a weapon of mass destruction, this is the single most important issue we confront as a nation," said Sen. Judd Gregg (R-N.H.), a commission member.
Republican Sen. Tom Coburn (Okla.), a physician known as "Dr. No" for relentlessly blocking Democratic initiatives, already has sent fellow commission members a binder full of ideas for cutting wasteful programs -- low-hanging fruit that he said could build public trust before a debate about higher taxes. Coburn also has spoken with Andy Stern, president of the Service Employees International Union and one of the commission's most liberal members, and found "a lot of areas where we think we can work together."
"If this commission is even halfway successful, it's a big win for Obama. But I don't think anybody on the commission is going to look at it that way," Coburn said. "The problems are too big. This is about our country."
At the very least, the Commission on Fiscal Responsibility and Reform will mark the beginning of a national conversation about the role of government in American society. Social Security, Medicare and Medicaid -- popular programs that guarantee income support and universal health coverage to people older than 65 -- are growing faster than tax revenue as medical costs rise and the population ages. In the coming decades, the three programs are forecast to dwarf all other spending and force the Treasury to borrow to keep them afloat.
That crisis seemed distant until the recession hit, causing tax collections to tank and federal spending to increase as policymakers scrambled to avert an economic collapse. The public debt is forecast to rise from less than 40 percent of the economy to more than 60 percent by the end of this year, its highest level since 1952. The debt will hit 90 percent by 2020 under President Obama's budget, according to the nonpartisan Congressional Budget Office, a level last seen in the aftermath of World War II.
Meanwhile, the CBO forecasts that interest payments will rise from less than $200 billion a year to more than $900 billion. At that level, debt service would eat up nearly 20 percent of all federal spending, according to the CBO, and more than 4.5 percent of the economy -- the highest level since the government began tracking net interest payments in 1962.