What We Hope to Hear from the State of the Union
In the State of the Union address tonight, President Obama is not expected to focus heavily on fiscal issues or the national debt. However, in laying out an agenda for the nation, we hope the President will mention that we have not yet tackled the drivers of our long-term fiscal imbalances.
Fix the Debt has enumerated some suggestions for what the President should say in his speech:
1. Remind the public that our debt problems are not yet solved. At 74 percent of GDP, debt levels are currently the highest they have been since the aftermath of World War II, and failing to address our long-term debt trajectory can result in slower economic growth, higher interest rates, less flexibility, an increased burden on future generations, and the potential for an eventual economic crisis.
2. Present ideas to make entitlement programs more sustainable. The President should reiterate his support for proposals he has already made, such as pegging cost-of-living adjustments to a more accurate measure of inflation, reducing and reforming certain Medicare provider payments, and increasing Medicare premiums for wealthy seniors. He could also introduce new ideas to improve the delivery and cost-effectiveness of health care, and to make adjustments for an aging population.
3. Call for comprehensive tax reform to encourage growth and competitiveness. President Obama should explain how tax reform can improve fairness, reduce complexity, decrease compliance costs, foster competitiveness, help grow the economy, and help to reduce deficits and debt.
4. Offer ideas for how to pay for new proposals. If the President proposes new initiatives, he should also offer ways to pay for the costs of these proposals, either with new revenue or with lower spending. The first rule of fiscal responsibility is to do no harm - at minimum we should not be making our debt situation worse.
5. Explain the important connection between jobs, economic mobility, competitiveness, and the debt. The president should explain that high debt levels can ultimately hurt mobility by slowing wage growth, increasing the cost-of-living for Americans, and making it more difficult for middle-class families to borrow for important investments in homes, education, and new businesses. Reforming our unsustainably growing entitlement programs makes these programs solvent, and allows us to invest in priorities that are central to encouraging economic mobility, like education.
Presidential leadership on these issues could help put pressure on lawmakers to focus on our country's fiscal issues and make important reforms to the drivers of our national debt. We hope the president recognizes the importance of gradually bringing down our elevated debt levels, and that the sooner a comprehensive plan exists to do so, the better.
While you're watching the State of the Union tonight, be sure to play along with our fiscal-themed bingo game, DEBT-O!