Leadership needed in the policy swamp as CBO projects ‘unprecedented’ debt

In Washington, fixing our country’s big problems requires marrying smart policy ideas with the leadership and conviction to enact them.

The Congressional Budget Office’s dire report on the long-term budget outlook, the first major publication under newly appointed Director Phillip Swagel, is just the latest example of that agency speaking truth to power in the tradition of its late founding director, Alice Rivlin. The report reminds us once again the nation is on an unsustainable fiscal path. Even with modest economic growth, CBO’s current-law projections show the level of federal debt will reach 144 percent of GDP by 2049. Some say, why worry? It’s only a projection.

When CBO’s base 30-year outlook is an impending calamity for American households, it sounds like the canary in the coal mine. But scan CBO’s more politically realistic scenario, and you find America’s debt will eclipse the size of our economy within a decade! The canary is already dead, but will lawmakers acknowledge it?

In four hours of debate from Democratic presidential contenders over two nights, the words ‘federal deficit’ went unmentioned. On the other side, the recent Republican tax cuts that blew a hole in the deficit show that the Grand Old Party are not the best fiscal stewards at the moment either.

True, the federal budget deficit is not a priority of the American public—ranking 13th among the most important issues in an Economist/YouGov survey. It’s difficult to comprehend when the numbers have become so astronomical, but the unimaginable truth is to consider the consequences of the entitlement programs failing or our currency in freefall.

Bipartisan leadership, both within the Congress and the administration, on the budget has been in short supply these last few years. And sadly, this has been made even more difficult by the recent loss of several of my heroes on the subject – some well-known such as CBO director Rivlin, economist Martin Feldstein, Commerce Secretary Pete Peterson, and Sens. Dick Lugar (R-Ind.) and Pete Domenici (R-N.M.), among others less known but critical federal budgeteers like Stan Collender and Ed Lorenzen. 

What all these budget heroes of mine propounded over their long, distinguished careers was the need for society to live within its means and protect those who fall behind. Domenici, a Republican, and Rivlin, a Democrat, worked tirelessly together in the autumn of their years and helped craft a comprehensive budget plan: Restoring America’s Future. In one of his last penned op-eds for the Wall Street Journal, Feldstein wrote: “The most dangerous domestic problem facing America’s federal government is the rapid growth of its budget deficit and national debt.”

To put America back on sound footing, we need new leaders who are willing to withstand the political heat, deal in hard truths, and negotiate in good faith. But leadership without direction is meaningless: they’ll need ideas.

This spring, the Peter G. Peterson Foundation brought together seven leading economic organizations to put forth their “solutions” to the spiraling debt burden. Organizations across the ideological spectrum prepared fiscal plans to stem, or at least stabilize, the level of debt to GDP over the next 30 years.

The Bipartisan Policy Center’s proposal fell in the middle of the other plans offered, but all achieved a reduction in the unsustainable CBO debt path projected for the future. Of significance, six of the seven plans, including BPC’s, called for the enactment of a carbon tax for both fiscal and environmental goals. Four of the seven also included an increase in the gas tax, in part to address needed public investments in the country’s crumbling infrastructure. Six of the seven plans included reforms to the Earned Income Tax Credit and Child Tax Credit, increasing support for working families.

On Social Security, four of the seven plans would increase the cap on taxable earnings, and five plans would raise the normal retirement age. Most challenging to all organizations, no surprise, was in the health care sector, where the variety of proposals was stark. One organization advanced a version of “Medicare for All,” one allowed for a Medicare buy-in for persons 55-64, and others supported converting the Medicare program to a simple premium support system.

No one, my budget heroes in particular, believes that any of this is simple. But with a wide array of policy solutions that would at least stabilize the debt burden, it’s the lack of leadership at both ends of Pennsylvania Avenue holding America back.

For those unafraid to work across party lines for the good of our country’s future, it’s time to stand up and take action.

William Hoagland is a senior vice president at the Bipartisan Policy Center and a former staff director of the Senate Budget Committee.