A fireside chat in ’09

It is natural that neither John McCain nor Barack Obama has yet leveled with the American public about the increasingly urgent financial situation facing the federal government. Campaigns are designed to do many things — principally to get elected — but not for providing frank assessments and hard messages about the coming need for real sacrifices by all of us. It is harder to have the required optimism when the facts radiate gloom. Unless the press and public push very hard, we will not know with any sense of precision during the campaign just what each candidate will actually do once he is sitting in the Oval Office.

Regardless of who is elected, soon after the votes have been counted and the lawn signs discarded, the nascent administration will, if it is wise, begin laying the foundation for a fiscal “fireside chat.” In the weeks after the election, the new president’s transition team will artfully begin pointing to independent reports on the inexorably deteriorating financial condition of Social Security, on concerns about the Medicare Trust Fund, on the swelling operating deficit (just estimated by the Congressional Budget Office at $408 billion), the implications of the protracted growth of the national debt, and on the ominous projections on future war spending about which the candidates agree.

It will be as though this information had been secreted away in some just-discovered government lockbox. An aura of urgency is what highlighting this “new information” will be intended to create, gradually allowing the new president to shift gears rhetorically from campaign messages long on who will benefit from his election to a more realistic assessment of the financial hole we are in and, more importantly, what it will take from each of us to climb out.

Franklin Roosevelt’s personality, and the hard reality of the early ’30s, made his famous radio format an ideal medium to reassure families that something was being done and that better times lie ahead. In 2009 the situation will be vastly different, and not just because the medium has shifted from radio to other media. Decades of unrealistic expectations, overspending, bloat and waste, and a deferred recognition of demographics are closing in on us. We are in our seventh year as a nation at war. There is a question of whether we have the stomach to put our own house in order.

The Social Security surplus, upon which Congress has been dining for decades, is already running to zero and will do so by 2017, impacting current budgets and begging the question of how — or whether — we will make good on baby boomers’ benefits expectations, not to mention those of succeeding generations. Medicare, with dependent populations about to explode its rolls and whose entire trust fund will run out of money in 2020, is a much more immediate and difficult problem, crying out for prompt attention, but not susceptible of easy answers.

Meanwhile, the already too high debt is poised to take off like a rocket if either candidate’s campaign tax plan is actually enacted. Sen. McCain (R-Ariz.) wants to continue the Bush tax cuts and Sen. Obama (D-Ill.) wants to shift their benefits to the middle class. Neither is talking realistically about affording the cuts or the savings that could be associated with repeal. Most tax reform plans also include repealing the Alternative Minimum Tax, a popular theme because its continuation threatens the middle class and therefore political job security. Problem is, repeal creates an $800 billion hole in revenues at a time when government costs are historically high.

And unless difficult measures are taken, interest on the debt, essentially a mandatory expenditure, will soon eat up even more than the current 8 percent of the total funds available for other needs. This is the equivalent of three cabinet agencies’ funding combined.

The new president’s fireside chat will have to be for adult consumption: honest, candid and factual, and it must call upon the best instincts of all us to be willing to share the coming sacrifices for the good of everyone. It should be the moral equivalent of an oral dose of cod liver oil, but it must also leave viewers and listeners some hope that we are really getting our house in order. The new president will have to reach out to strike a chord with citizens such that people will say, “That needed to be said a long time ago. Let’s get on with it!”

Dowley, a partner in the Washington office of McKenna Long & Aldridge LLP, was chief counsel of the House Ways and Means Committee when Congress last addressed tax reform.