Event: The Moral Case for Addressing America's Fiscal Crises

Jan 17, 2014

A large national debt has far-reaching consequences. On the blog, we often talk about the economic consequences of debt, as they are perhaps the most easily quantified. However, there are also moral and ethical consequences to leaving a large debt burden to future generations and risking a fiscal crisis. Yesterday, CRFB hosted a discussion that examined the less covered side of the budget debate.

The event, The Moral Case for Addressing America’s Fiscal Crisis, was moderated by Rev. Dr. David Gray, Senior Fellow at the New American Foundation and five panelists: Marc Goldwein, Committee for a Federal Responsible Budget; Josh Good, Values and Capitalism Project, American Enterprise Institute; Rev. John Allen Newman, Senior Pastor, The Sanctuary at Mt. Calvary Church; Dr. Jay Richards, Distinguished Fellow, Institute for Faith, Work and Economics; and Mark Tooley, President, Institute for Religion and Democracy.

Marc Goldwein was the first speaker and laid out the current state of the budget, with a mixture of some good news, but unfortunately more bad news. Goldwein noted that our current debt levels are extraordinarily high: twice the historical average and the highest since WWII. The good news was that according to most projections, our debt will slightly decline over the next 5 years as a share of the economy and recent budget agreements indicate that Congress is actually starting to govern again. However, the types of deficit reduction enacted to date (large cuts to discretionary spending through sequestration) are the wrong kind of austerity debt reduction measures - upfront and anti-growth. Cuts to date have impacted low-income housing, education, and R&D, instead of implementing reforms to protect the most vulnerable and promote investments in future economic growth.

Perhaps the worst problem, said Goldwein, is that despite the deficit reduction, our debt problems are far from solved. Policymakers have not yet addressed the drivers of the debt: population aging and rising health care costs. The three fastest-growing programs— Social Security, Medicare, and Medicaid—have barely been changed. And, according to Goldwein, debt will return to its unsustainable path after 2018 or 2019.

Reverend Newman was second and talked about the importance of the faith community as a transcendent non-partisan voice that would call politics to a higher purpose. He remarked on the importance of hold politicians accountable for an honest discussion.

The third speaker, Dr. Jay Richards, asked an important question: "Is it just to borrow money that someone not party to the transaction must repay?" Richards argues that we do have a moral obligation to future generations that might not exist yet, and this creates a moral significance to our future debt burden.

Josh Good noted that a looming debt will eventually lead to austerity measures, the recent experience of Greece and Spain being prime examples. And when austerity measures do hit, they will not hit the very wealthy, but instead the poor. Good noted that while welfare policies might lead to "learned helplessness," government contracting could create a similar helplessness for those who received those contracts. However, there was every reason for optimism. There is still room to get ahead of the problem by making tough sacrifices.

Mark Tooley noted that deficit reduction plans are often challenged by a desire to protect programs that support the very poor. However, increased indebtedness will also hurt the very poor, especially the very poor of future generations. Fiscal responsibility remains key and lawmakers must not shy away from tough choices.

The questions presented to the speakers also presented some important questions to keep in mind in the budget debate. One question presented to the panel was the size of government. Richards noted that small governments could also have unsustainable debt, so that really the question was how to support the government that the people have chosen. Newman noted the importance of balance and staying above the fray, as it was possible to justify your own socioeconomic status through scripture. The faith community needed to rise above that to help guide the country said Newman.

The full discussion is worth watching as it covers many issues that we do not normally talk about on The Bottom Line. The budget discussion is more complicated than just revenues and spending, which makes solving the problem more difficult, but it's clear that the stakes go beyond economics as well. The decisions we make today will affect future generations that are not able to voice their opinion.

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