Erskine Bowles to Kiplinger: Beware the Ticking Debt Bomb
Today, Kiplinger's Personal Finance published a new interview with Fiscal Commission co-chair and CRFB board member Erskine Bowles. In a discussion with editor Janet Bodnar, Bowles argues that despite modest improvements in our country's fiscal outlook, we still face a crisis unless lawmakers deal with the long-term drivers of the national debt.
If the country sticks its head in the sand and chooses to ignore the big problems, sooner or later the markets will wake up and demand that we take action...at some point the markets will look at our country and say, Whoa, you guys have a dysfunctional government, you're addicted to debt, clearly the fiscal path you're on is not sustainable over the long term, and you have no plan-nothing-to deal with it.
This commentary is especially timely given the Murray-Ryan bipartisan budget agreement, which the House passed yesterday. While that agreement is a step in the right direction, it barely improves deficits over the long term. Lawmakers should build on Ryan and Murray's example and find common ground on real reforms to put us on the right fiscal path.
Both sides are going to have to do this together because Democrats are not going to agree to any changes in entitlement programs unless there's additional revenue, and Republicans aren't going to agree to any new revenue unless there are substantive changes in entitlements.
As a co-chair of the Fiscal Commission, Bowles understands how difficult the politics of this issue can be, but also believes that a principled deficit reduction proposal can get support from both parties. Specifically, he recommends that any compromise follow several major principles that he and Senator Alan Simpson followed in their proposal.
In our plan, we laid out a number of principles that we wouldn't violate. First, we didn't want to do anything that would disrupt a very fragile economic recovery...our second principle was that we didn't want to do anything that would hurt the truly disadvantaged...Third, we wanted to make sure we reformed the tax code so that the U.S. would be more globally competitive. Fourth, we wanted to make Social Security sustainably solvent so it will actually be there for the people who need it. And we wanted to bend the health care cost curve because if we don't, it will bankrupt us. Finally, we wanted to get rid of some of the inane, really stupid cuts that are in the sequester and replace them with smart reforms in other mandatory programs.
If lawmakers are willing to pursue a balanced deficit reduction strategy that follows these core principles and includes real entitlement and tax reforms, Bowles believes that our government's fiscal credibility will be well on its way to being restored.
Click here to read the full interview.