The federal debt is the nation’s most pressing economic problem because our dangerously high debt levels are a threat on every issue — be it jobs, growth, competitiveness or public under-investment. The deficit is already harming the economy, and could eventually lead to a devastating fiscal crisis.
To suggest we must decide between debt reduction and economic recovery is to present a false choice. To the contrary, we cannot achieve one without the other. The key will be to implement a comprehensive debt deal large enough to fix the problem, phased in gradually enough so as not to derail the recovery, and designed to promote economic growth through reforms to the tax code and cuts in government spending that protect productive government investments.
We must be willing to reform all parts of the budget, including health care, Social Security, defense and taxes.
The upcoming fiscal cliff will soon cause the moment of reckoning. If we hurdle ourselves off the cliff, doing too much deficit reduction, too fast, and in the wrong ways, we will plunge the nation back into recession; whereas if we punt, we will surely endure further downgrades and quite possibly frighten credit markets into no longer favoring the U.S.
Instead, we must be willing to use this moment as the first step of putting in place a comprehensive debt deal. We will have to be willing to reform all parts of the budget — including health care, Social Security, defense and taxes. Doing so would not only be good policy, but good politics. Already, more than 140,000 Americans have signed a petition called Fix the Debt, asking our leaders to pass a comprehensive debt plan.
Any plan will have to be bipartisan, because quite frankly this will be just too hard for either party to do alone. And if we let the presidential election deteriorate into political posturing, we will make the job of passing the needed reforms even harder. It’s not enough for the candidates to accuse each other of touching the budget’s sacred cows; they must present their realistic plans to fix the debt — plans in which those sacred cows will have to be touched.
Changes will have to be made. We can do it on our own terms, or we can wait until we are hit with a crisis and are forced to — as we have seen in Greece and Portugal. Let’s hope our leaders are willing to come together to fix the debt while we still have time.
