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Calling the Question on the National Debt

by Ruth Wooden

Thursday, January 28th, 2010

In the State of the Union speech last night, President Obama said the one of the most thoughtful ways of attacking our budget crisis is to name a bipartisan commission to guide our fiscal future onto a sustainable path, in contrast to the unsustainable path we are on now.

A commission of experts can certainly come up with reasonable suggestions for how to create a sustainable federal budget. But the debate over the national debt and the federal budget isn't just about money, it's about values, and as President Obama said last night, it's also about trust. The federal budget is an expression of our priorities as a country. How we trust our government to spend the taxpayers' money (and who gets taxed) says something about what Americans value, and what we don't.

Budget debates reflect fundamental differences in public values, priorities, and the tradeoffs they're willing to make to accomplish their goals. People hold sharply different values about what they want or need from government, what government can actually deliver, and what role it should play in daily life. These differences in beliefs and interests need to be recognized and reconciled before the government can make long-term budget decisions.

If you judge the United States by its budget, however, you might be forgiven for thinking Americans are a little muddled on key points. As a nation, there's a fundamental mismatch between what our government spends and what takes in, a situation that's going to get worse in the foreseeable future. So far, our political system we've been wanting more from the government than we've been willing to pay for some time.

One of the most crucial points about the Choosing Our Nation's Fiscal Future report is that it calls the question and asks for dialogue on some of the fundamental questions that underlie our budget problems. How big should our government be? What kind of services do we want? How are we going to pay for it? What do we need to do to ensure fairness between older and younger generations?

The Committee on the Fiscal Future of the United States didn't take positions on any of these questions. But the committee members felt strongly that we have to recognize that these questions are out there, shaping the decisions the government makes. That's why we devoted an entire chapter of the report to some of the values questions and how they affect the budget, like fairness, economic growth, efficiency, security, and the size of government.

The members also believe that these differing values, in and of themselves, aren't the source of our budget problems. There are a number of ways to put the federal budget on a sustainable path, from widely different philosophical perspectives. We thought the best way of illustrating that was to come up with four alternative paths. Any of them would stabilize the national debt at 60 percent of GDP, our overall goal for eventual, long-term fiscal stability. Each of them approaches the problem differently, but they all get there:

Low spending and revenue This path would allow payroll and income tax rates to remain roughly unchanged, but it would require sharp reductions in the projected growth of health and retirement programs; defense and domestic spending cuts of 20 percent; and no funds for any new programs without additional spending cuts.

Intermediate path 1 This path would raise income and payroll tax rates modestly. It would allow for some growth in health and retirement spending; defense and domestic program cuts of 8 percent; and selected new public investments, such as for the environment and to promote economic growth.

Intermediate path 2 This path would raise income and payroll taxes somewhat higher than with the previous path. Spending growth for health and retirement programs would be slowed, but less than under the other intermediate path; and spending for all other federal responsibilities would be reduced. This path gives higher priority to entitlement programs for the elderly than to other types of government spending.

High spending and revenue This path would require substantially higher taxes. It would maintain the projected growth in Social Security benefits for all future retirees and require smaller reductions over time in the growth of spending for health programs. It would allow spending on all other federal programs to be higher than the level implied by current policies.

Again, the committee isn't endorsing any of these paths. The goal is to show that there are a lot of options for solving the problem, no matter what your political philosophy. That's critical to gaining true public input on solving our budget problems.

Turning our fiscal problems over to a commission doesn't mean the rest of us can sit on our hands. We cannot solve this problem without the public. And the Committee on the Fiscal Future of the United States has provided this new commission with a head start on how to engage the public in dialogue around the values choices embedded in any final fiscal plan.

Coming up with specific policy proposals and formulas is the province of the experts. But setting national priorities is emphatically the province of the American public. However we move forward on budget problems, let's remember that the only people who can choose our fiscal future are the same ones who will have to live with the choices: the American people. The Committee on the Fiscal Future of the United States called the question, but it's up to the public to provide the answer.

Public Agenda President Ruth Wooden served as a member of the Committee on the Fiscal Future of the United States. This blog appeared on the Choosing Our Fiscal Future web site, and you can find out more about the project on Twitter @FiscalFuture and on Facebook.


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