America must restore fiscal sanity

Now that Joe Biden is set to be the next president, time for the country to focus on the future. It looks like Republicans will control the Senate after the Georgia runoffs, while Democrats will control the House by a smaller margin. These close election outcomes demonstrate that the country is divided and there is no mandate for action based on the agenda of either party. It also means that any major legislation will need bipartisan support and difficult decisions could take special mechanisms.

Given these facts and our current deteriorated financial condition, it is time to create a statutory Fiscal Sustainability Commission. We must take steps to halt the projected dramatic increase with federal debt levels and achieve a reasonable ratio of public debt to gross domestic product over a stated period of time after we defeat the coronavirus. Failure to control our escalating federal debt levels would result in lower economic growth, national security, domestic peace, and world standing.

Putting our finances in order takes difficult choices on revenue, spending, investments, and reforms to programs like Medicare and Social Security. Such comprehensive reforms are highly unlikely to occur with the normal legislative process. As a result, the president should use the bully pulpit to create a new Fiscal Sustainability Commission, and the bipartisan House Problem Solvers Caucus should support this effort.

This new panel would use lessons from the Simpson Bowles Commission. It would be statutory and transpartisan. It would also engage Americans outside the beltway, interest groups, and federal officials, and then make a package of recommendations that would be voted on in both chambers of Congress. This new panel would set the table for elected lawmakers and the president to take action on. Former members of the Simpson Bowles Commission and many others also support this effort.

Contrary to the opinion held by numerous elected officials, Americans are willing to accept several difficult choices today in order to create a better tomorrow for their children and future generations. But such choices must be part of a broad plan consistent with a set of principles and values that will bring people together rather than divide them.

I am confident that we can reach success due to my background on fiscal matters. In the autumn of 2012, I led one national fiscal responsibility bus tour. A critical part of it included two large gatherings with representative groups of voters in Ohio and Virginia, which were swing states at the time. Alice Rivlin, Belle Sawhill, and I gave voters the facts about our financial position and monetary outlook. We achieved over 80 percent agreement on a fiscal debt goal, a reasonable ratio of projected revenue increases to spending reductions, and the principles to guide reforms on the budget, defense, health care, and government transformation.

It is time to face the reality that we are in much worse shape today than we were in 2012. We must do what is necessary to defeat the coronavirus, but we must make difficult fiscal choices sooner rather than later to avoid a crisis of confidence over our ability to enact sound fiscal and monetary policies. Such a crisis would no doubt result in severe adverse economic effects both here at home and all around the world.

Further, do not be fooled by modern monetary theory advocates who say federal deficits and debt levels do not matter for a country like the United States if inflation is under control. This notion is simply contrary to history, against economic principles, and downright dangerous. If it is used by the government, it would likely cause excess inflation and would likely result in more unsustainable fiscal and monetary policies.

It is vital to remember that the United States is not excused from the laws of prudent finance. Further, the greatest threat to our national security is internal. But luckily we can solve our own problems today, and Americans will support important reforms with strong leaders. It is time to establish a better future for this country and for Americans. This would be a powerful legacy for the next president and his administration.

David Walker served as the former United States comptroller general. He is the author of “America in 2040: Still a Superpower? A Pathway to Success.”