Every serious observer knows that we need to increase our country’s debt ceiling and get behind a comprehensive, balanced, bipartisan solution to our $14 trillion debt and our $1.5 trillion annual deficit.
So what are we waiting for?
We are waiting for politicians to quit drawing lines in the sand and admit that solving this gigantic problem in a time of divided government means that both sides will have to give ground.
We are waiting for business leaders to stop talking vaguely about the need to get our balance sheets in order and to call out elected leaders who stand in the way of doing it.
We are waiting for the leaders of Wall Street to speak out. They have recovered far more quickly than most Americans from the market meltdown of 2008, but they at least should understand the repercussions of playing Russian roulette with the debt ceiling.
I’m glad that President Obama has invited congressional leaders to the White House Thursday to discuss possible solutions to our country’s fiscal crisis. We add more than $4 billion to the national debt every day that we fail to act, and the Treasury’s Aug. 2 deadline on the debt ceiling is fast approaching.
For months, we have known that no plan will succeed if it just slashes programs such as Medicare or imposes big hikes in tax rates. We’ve known that we need a plan that eliminates at least $4 trillion in debt over the next decade, slows the growth in entitlement programs and raises new revenue through tax reform.
Everything I learned about our economy and the financial markets as a businessman and as a governor tells me that we cannot wait much longer.
Business leaders all tell me the same thing: Failing to raise the debt ceiling will increase interest rates, gut consumer confidence, and drag down business investment and job creation. Every one-point increase in interest rates increases the national debt by $1.3 trillion over a 10-year period, and who knows how much rates could increase.
Yet with few exceptions, our business leaders have not demanded an end to the political brinkmanship. Wall Street, too, has been strangely silent.
Two years after a near-collapse of our financial markets, even with ominous credit-watch pronouncements issued last month by Moody’s, Fitch and Standard & Poor’s, many business leaders yawn as some elected officials prepare to punt on the full faith and credit of the United States.
Maybe business leaders think that this debate is just political theater and assume that a deal will emerge. Maybe they don’t believe politicians who declare that they will never vote to raise the debt ceiling or casually rule out entitlement reform or a penny of additional revenue.
If we don’t act boldly before Aug. 2, working from both sides of the balance sheet, the smart money soon will begin to bet against us on world financial markets. Add that to financial upheaval in Europe, and you have a recipe for an economic disaster far worse than we faced in 2008.
Unlike 2008, however, our nation has already used the traditional economic tools available to us. The Federal Reserve slashed interest rates, and Congress passed a fiscal stimulus, but the U.S. recovery remains weak. And still the debt grows.
These are the facts that demand tough choices: Federal spending is at an all-time high of 25 percent of our GDP, and our government revenue is about 15 percent of GDP, a 60-year low.
It doesn’t take an MBA to recognize that the only way to close that gap and restore fiscal stability is to attack both sides of the ledger. We must cut spending, including defense and entitlements, and we must find reasonable ways to increase revenue.
In six months of increasingly tough negotiations as part of the Senate’s “Gang of Six,” I’ve learned that failing to embrace a bold, comprehensive, bipartisan plan will wreck our economic recovery, kill jobs and place our country at a competitive disadvantage for decades.
The president’s bipartisan fiscal commission called its report “The Moment of Truth.” Here is the truth: We need to raise the debt ceiling and ignore irresponsible politicians who would let us default.
To regain fiscal health, we need a plan that cuts our debt by at least $4 trillion. It can achieve that only with spending cuts and greater revenue.
Elected leaders who ignore the truth and business leaders who indulge them will be responsible if we fail.
The writer, a Democrat, is a member of the Senate’s Banking, Budget, Commerce and intelligence committees. He is a co-founder of Nextel and was governor of Virginia from 2002 to 2006.