Source: Dallas Morning News
The deficit and debt are rising as political issues. But what are we supposed to do about them? Points turned to David Walker, author of “Comeback America,” for ideas. Walker, who spoke Friday in Dallas to the National Center for Policy Analysis, is in a position to have them. The former U.S. comptroller general now heads the Peter G. Peterson Foundation, which has held town halls to educate Americans about these issues. Here’s an excerpt of his views:
Let’s start with recent events. The Senate just turned down a plan to create a bipartisan commission to tackle entitlement spending. President Barack Obama, on the other hand, proposed one. What’s going on?
It was disappointing that the Senate didn’t create a statutory federal fiscal commission. That would have been preferable to the one President Obama has promised to create by executive order since, among other things, the Senate plan would have required Congress to vote on the commission’s recommendations.
But the proposal did get more votes than expected. It received 53, and that was over double the number that sponsors were expecting a few days before.
But how could senators not vote for this bill? Americans are increasingly worried about the deficit. And markets want some signal that we’re taking our debt seriously.
Frankly, a number of senators caved to pressure from the far right and far left and voted against the commission proposal. We have people on the fringes with rigid ideologies that aren’t in touch with reality. People on the far right think we can solve our problem at historical revenue levels. And that won’t work.
Revenue levels? You mean taxes?
Yes, but not all revenues come from taxes. We also get them from other sources, like user fees and premiums.
You also have some liberals who think we shouldn’t renegotiate the social contract. We can and must do that. Medicare is already about $38 trillion in the hole.
How do you read this new populism? Does it enthuse you? Or is it without direction?
I’ve been to 46 states in the past four years, conducting town hall meetings. I’ve sensed this coming for a while. The public is disheartened and growing angry. They think Washington is out of touch and out of control. And they are right.
They don’t like either party. We saw the rise of independents in Massachusetts with Scott Brown’s election. Republicans shouldn’t overreact. The public doesn’t have a positive view of them, either.
Democrats should worry that polls show that the deficit and debt are No. 2 on the public’s list of worries. They are way ahead of health care and climate change.
You present grim statistics in your book, including that by 2030, Americans could face higher tax rates than Europe because of our debt. That’s not far away. What should we do?
Let’s separate the short-term deficit from the structural one. Our current deficit is caused by the recession, various bailouts, two wars, several tax cuts and recent increases in federal spending. It will remain high for a couple of years and may rise in order to stimulate the economy and create jobs.
The deficit we should worry about is our large and growing structural one. We need a fiscal commission that recommends budget controls, reforms in Social Security, Medicare and Medicaid, our tax system and various other changes.
But a presidential commission won’t have as much power as a statutory once since Congress won’t have to vote on its recommendations.
That’s a major reason the Senate’s statutory commission was better. But the president has worked with Harry Reid and Nancy Pelosi to help ensure that recommendations from his commission will get a vote. He also could turn them into legislation and ask for a vote.
If the speaker wants a vote, there will be one in the House. But the Senate is more difficult. You need 60 votes to get something done there because of the filibuster threat.
That’s why we need to go to the people to educate and activate them. We need to marginalize the fringes and build the sensible center.
Agreed, but how do you do get around the special interests fighting against cuts in their back yards?
You have to go over their head and outside the Beltway. Go to the American people. And, believe me, they get it.
You write that Americans shouldn’t assume that this country is too big to fail. But the Chinese need us to buy their exports. Do you think they really will stop buying our debt?
No. They won’t buy as much, but they will demand a higher interest rate for what they do buy.
Believe it or not, even if interest rates do not rise, within 12 years, the largest item in our budget will be interest on the debt. And I assure you, rates will go up after the economy rebounds. The question is, how high will they go?
This Q&A was conducted, edited and condensed by Dallas Morning News editorial columnist William McKenzie. His e-mail address is wmckenzie@dallasnews.com. David Walker’s e-mail address is ceo@pgpf.org.