The 34 names are familiar to anyone who has followed
economic policy in Washington for the past generation, one-third of them
former chairmen or members of key committees of Congress, seven of them
former directors of the White House Office of Management and Budget, two of
them former comptroller generals of the United States, seven of them former
directors of the Congressional Budget Office and one of them Paul
Volcker the former chairman of the Federal Reserve System and now an
adviser to President Obama.
Both political parties are well represented in their number. But they
came together this week as signatories of a nonpartisan manifesto,
essentially a stark warning to the president and Congress and a plea for
action on behalf of the next generation.
The United States, they unanimously said, is facing "a debt-driven
crisis something previously viewed as almost unfathomable in the world's
Under the impact of the worst economic calamity since the Great
Depression, the federal government ran a deficit of $1.4 trillion this past
year. The rescue effort was necessary, but in 2009 alone, the public debt
grew 31 percent from $5.8 trillion to $7.6 trillion, rising from 41 percent
to 53 percent of gross domestic product (GDP).
Unless strong remedial steps are taken, in the years just ahead, the
debt is projected to rise to 85 percent of GDP by 2018 and 100 percent four
years later. By that time, barely a dozen years from now, these
sober-sided, deeply experienced folks say, the American economy will likely
be in ruins.
All of us have become accustomed to hearing lamentations or
partisan accusations about the changes in the annual budget deficits,
the gap between federal revenues and spending in a particular year. But
this commission deliberately shifted its focus from the deficit to the
The reason was explained to me by one of the Democrats, Alice Rivlin,
formerly a director of both the Congressional Budget Office and the Office
of Management and Budget. "Previously, when we were worried about deficits,
we could take comfort in the fact that the debt was not very high relative
to the economy," she said. "But now that debt has shot up. The cushion has
gone. If the same thing (a severe recession) happened again, we wouldn't be
able to borrow to deal with it."
In addition to robbing us of the flexibility to deal with future
crises, the rapidly rising debt level could push up interest rates,
threatening economic recovery, slow the growth of wages, depress living
standards, make the United States even more dependent on foreign lenders
and leave us vulnerable to a shock wave if those lenders lose confidence in
our ability to repay the loans.
To avoid those consequences, these experts writing under the
auspices of the Peter G. Peterson Foundation, The Pew Charitable Trusts and
The Committee for a Responsible Federal Budget suggest a series of
First, they want Obama in his State of the Union address to urge
Congress to join in a pledge to stabilize the debt, at no higher than 60
percent of GDP, by 2018. (Remember, it is 53 percent now.) This would
require actions by both Congress and the administration to start reducing
the projected annual deficits, which add to the debt, starting in 2012.
That would make debt-management an economic priority once the effects
of the current severe recession have eased. To assure the pledge is kept,
those who signed this report would ask Congress and the president to set up
an enforcement mechanism that would automatically reduce spending or
increase taxes when the debt target is missed in any year between 2012 and
This is stiff medicine, but the message of this report is that
temporizing on this issue poses such perils to the nation's future that the
risk is unacceptable.
When Congress this week ducked its responsibility again by deciding to
enact a temporary, two-month increase in the debt ceiling, the need for a
shock treatment like this report could not be plainer.