Washington Post Warns of Coming Debt Panic

The Washington Post, this morning, warned that it is "time to start panicking" about the long-term debt, and that bipartisan action would be needed to avert a crisis. They cite the work of the Peterson-Pew Commission on Budget Reform in particular, and reference today's commission report - Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt. Here are some quotes from the editorial:

IT'S TIME to stop worrying about the deficit -- and start panicking about the debt. To put it another way, short-term deficits aren't the real problem. The punishing hangover of borrowed money is. The ballooning national debt once looked like a long-term problem. Now, the long-term has become the middle-term, fast-forwarded by the cratering economy and the unavoidable and immense spending in the service of saving it.

The fiscal situation was serious before the recession. It is now dire. An important proposal being released Monday by the Peterson-Pew Commission on Budget Reform urges Congress and the White House to commit immediately to stabilizing the debt at 60 percent of GDP by 2018; come up with a credible plan for getting there; and begin phasing in the necessary policy changes in 2012, once the recovery is fully underway. Warnings about fiscal danger may sound familiar, but one reflection of the current circumstances comes in the composition of the group that signed on to this report and agreed that both tax increases and spending cuts would be required. They range from a liberal former chair of the House Budget Committee, William H. Gray III of Pennsylvania, to a conservative former chair, Jim Nussle of Iowa. The recommendations envision annual benchmarks, enforceable by a debt trigger that would impose spending cuts and a surtax if the specified reductions were not achieved. Once the debt is stabilized in 2018, the goal would be to set it on a glide path to further reduction, closer to the historical average of below 40 percent.