It’s campaign season, so you’ve probably seen your fair share of political promises through your mailbox and the oversaturated airwaves. But as candidates exchange insults and point fingers, there is really only one promise that you should be looking for this November: “As your elected representative, I promise to do everything in my power to place our $16 trillion debt on a downward path.”
That’s a pretty straight-forward pledge, don’t you think?
Unfortunately, “straight-forward” and D.C. politics rarely come together — but that has to end. The country is addicted to borrowing money from the public and countries abroad instead of making the hard choices necessary to set it on sound financial footing into the future. That means being honest about what our largest entitlement programs and our biggest tax breaks will cost, what we are willing to pay for and even what we are able to afford as a country.
We have not been forthright about the trajectory of our debt or sincere about the changes needed in order to bend it downward. This has left our country facing the types of looming fiscal challenges that most people would associate with Europe.
Rising debt threatens our standard of living and the resources we will have in the future. Pick what’s important to you — whether it is federal highway, education or science spending or a low tax burden. Rising debt will empty resources out of the private economy and reduce the amount of resources available for critical programs within the federal budget. That’s the bad news. On the bright side, we still have time to implement policies that will slow the growth of this budget-devouring monster.
Here are the numbers you need to know: $16 trillion, $35,000, 218 and 60.
Earlier this year our national debt hit $16 trillion, a figure that continues to spiral out of control. The $16 trillion figure is actually two numbers. There is $11 trillion in debt that is held by the public — that’s us. Another $5 trillion is what’s known as intergovernmental debt. That’s the money that government “borrows” from another government agency. Think social security trust fund and you get the picture. Either way, it’s not good. Credit rating agencies are increasingly warning us of the dangers posed by our debt.
The next number: $35,000. That’s your share of the federal debt held by the public. That’s right. You and I and every other person in the United States owe more than $35,000. Each. But that figure relies on spreading around the burden equally to every person, including retired workers and children who are not part of the labor force. Spreading the national debt around only among working taxpayers increases the burden significantly. That does not include the $5 trillion of intergovernmental debt.
The next two numbers are where you and I come in. Those are the number of votes we need from Congress to do something meaningful on the debt. That’s 218 votes in the House of Representatives and 60 votes in the Senate.
But with all of these challenges comes opportunity. A new movement called the Campaign to Fix the Debt is seeking to encourage our elected officials to work together in order to find a bipartisan solution that will cut wasteful and low-priority spending, rewrite the tax code and reform our largest entitlement programs to preserve them for the next generation and even strengthen them for those who need them most. The Campaign to Fix the Debt is taking up the mantle from the Simpson-Bowles Commission, which recommended a series of budget cuts, tax reforms and entitlement changes to gradually put the debt on a downward path as a share of the economy.
Despite starting this summer, more than 180,000 Americans have signed the group’s petition at www.FixtheDebt.org, urging elected officials to find a plan that controls rising debt. Given the stakes, it’s a campaign that all Mainers should support.
The time has long passed for elected officials to stop issuing platitudes. Instead, we must take action. We have no choice but to face the reality that we must start paying for what we believe is important or else leave the economy far weaker than what it could be. I would encourage each of you to ask your elected officials and all of the candidates running for office to take the pledge and fix the debt.
Phil Harriman is a former state senator and a partner in the financial planning firm of Lebel & Harriman in Falmouth. He offers political opinion and analysis for news radio 560WGAN and the NBC affiliates in Maine. He and Ethan Strimling write a weekly column for the BDN called Agree to Disagree.
I agree there is a problem and it needs to be fixed, but the devil is in the details, finding acceptable reductions of tax loopholes that has robbed America of revenues, and an expenditure of the limited revenues with a lack of diligence towards the goal of protecting and preserving America’s right of a pursuit of well being for “all,” not just a mad race of accumulation of individual wealth in an economic and cannibalistic form of vulture capitalism. If we went back to the 1950 and ’60 tax laws and military spending we’d be awash in revenues and most likely – debtless
Other than that sounds like an endorsement for Angus King.
Is this the same pledge the “unelected, non government, official spokesman for the 1%” Grover requires or an addendum? LMAO!
As Paul Krugman notes, “Despite years of dire warnings from people like, well, Alan Simpson and Erskine Bowles, we are not facing any kind of fiscal crisis. Indeed, U.S. borrowing costs are at historic lows, with investors actually willing to pay the government for the privilege of owning inflation-protected bonds. So reducing the budget deficit just isn’t the top priority for America at the moment; creating jobs is. For now, the administration’s political capital should be devoted to passing something like last year’s American Jobs Act and providing effective mortgage debt relief.”
Austerity kills national economies.
Just because we can spend money doesn’t mean we should.
We borrow 40 cents of every dollar we spend. although the interest may be low it still amounts to billions each year. JUST THE INTEREST.
Just today I saw an interview with Christine Lagarde, head of the IMF. She called the measures in Spain bold and brave. 25 % unemployment. More tax money isn’t near enough in Spain or the US. Things have just got to change.
The government employs people simply as a byproduct of the need for people to deliver services. The government should never be in the business of looking to employ more people just to employ more people. Beyond that what is the President’s big .bold plan to create more PRIVATE sector jobs?
Paul Krugman is a imbecile.
“Just because we can spend money doesn’t mean we should.”
OK, lets say you have a mortgage on your house but you have no problem making the payments. Your house develops a leaky roof, but you have no budget to repair it. Someone offers to loan you the money for the repair with almost no interest attached. Using your reasoning process, you wouldn’t borrow money to repair the roof, even though you could afford both payments – after all, just because you can spend the money, it doesn’t mean you should.
But the point is, if you’re putting 40% of your expenditures on your credit card and letting the balance ride, you aren’t “making the payments.” And that’s the situation the US is in right now.
It’s Keynsian economic theory v. Austrian economic theory. The facts of the Great Depression and the economic deregulation that began in 1980 seem to be able to support either camp. However, what hits home now in Spain, Greece, Ireland, Britain, and here is not the debt but the response of governments to placate banking interests that caused the problem at the expense of the people. Removing the welfare state in the midst of such a dire economy kills the safety net at the time it’s most needed. Other solutions that focus on full employment and ending the ineffective Bush tax cuts should be found. Incidently, Krugman’s won a Nobel Prize.
You have just provided support for the Romney/Ryan growth plan. They want to reform taxes and provide stability so that companies and job creators will invest in America and create 12 million jobs in 4 years. The left attacks the plan by arguing that that this would not reduce the deficit. Well if reducing the deficit is not a priority for the left, they should support this plan. Eventually, when we have an additional 12 million tax payers and we start to control the entitlement explosion, the deficit will be reduced.
Massive government spending is so 2009. It was tried and it failed.
“Job creators?” They’ve been given billions of dollars in special tax breaks at the expense of average taxpayers like you and me.
WHERE ARE THE JOBS?
Why throw more money at millionaires and billionaires until they start performing? Talk about an entitlement explosion! What do you figure these “job creators” will require from us before they condescend to create jobs in the US? Our first-born children?
+10 years of the Bush tax cuts have proven that tax cuts do not create jobs. “Tax reform” is code for lowering taxes on the rich. “Stability” refers to the magical confidence fairy who will grant all our economic wishes if we sacrifice the old and poor on the alter of austerity and deregulation. Heathens.
National debt? Most Americans are up to their eyeballs in debt. Why shouldn’t their government be in hock too? This problem needs to be solved from the ground up, not the top down.
Another scaremonger pushing national debt as the bogeyman of the moment. He throws around really big numbers as a reason to be scared, because peoples are easily scared by really big numbers.
What he doesn’t tell you is that the debt to GDP ratio – the figure that represents a nations ability to repay it’s debt – has been significantly higher in the past. Or that the American banks hold 80 cents of debt from other nations for for every dollar of debt that the US owes to another nation. Deficit hawks are angry old men who are jumping at the shadows of things they cannot quite understand.
One of the ways out of debt is to make the wealthy start paying their fair share and close the loopholes that allow them to move money into overseas banks, a la Mitt.
Are you saying that you want controls on what people do with their own money?
Yes.. If you amass a fortune in the US, you should pay taxes on that money. Favoring overseas transfers of wealth to avoid taxes is favoring tax evasion.
Well yes. But what if you transfer the money after paying taxes on it? That is what we are talking about isn’t it. Someones legally obtained money.
There is a loophole in the tax code that Romney has used that allows private-equity managers to treat their income as capital gains, subject to a 15 percent tax, even when they risk no capital of their own. That’s the sort of evil shenanigans that should be shut down. Romney has said that he has used every legal method to reduce his tax liability. He’s also said that as president he would close tax loopholes in order to help finance a major across-the-board tax cut. I wonder what specific tax loopholes that he has used that he would close?
“There is 11 trillion dollars in debt that is held by the public–that is us. ” Am I reading this right? That 16 trillion dollars in debt for which our government is blamed and Obama and previous presidents and governors are criticized, is actually our own personal debt? Is that monies that we owe, for instance, to the banks for our mortgages, our MasterCard/Visa/AmericanExpress/Discover cards, our outstanding debts for medical expenses to hospitals and medical providers, our car loans, etc. etc. and those debts total 11 trillion dollars??? Is that what Phil is referring to? Aren’t we responsible for those loans ourselves, and not our governments, be they federal, state, or local? Is our government only 5 trillion dollars in debt? By any means, that is not a small amount of money; however, we, together, owe 11 trillion dollars? That is a heck of a lot of moolah! If I am understanding that statement wrongly, please explain the author’s statement above to me. I am willing to listen.
Nice column, Phil. This is a discussion that has to get beyond partisan talking points. The national debt is higher now, per capita, than at any time in modern history, with the exception of the end of the second world war. Within two decades, without major action, interest on that debt will crowd out spending on virtually everything in the federal budget but medicare, social security and national defense. Everything. We need to take our tax code back to where it was before Reagan and Clinton bought into the trickle down rhetoric about job creators, which has not produced anything but job flight, cut spending and get out of foreign wars. It’s not that complicated, but everyone wants to cut what the other guys want without touching the things they hold dear. Both parties are contributors, in my view.
You talk about getting beyond “partisan talking points”,then you launch into partisan talking points. You must be speaking of the other guys “partisan talking points”, not your own.