Is the Budget Battle Making America Less Competitive?
It’s said that one definition of national decline is when a country can no longer bring itself to do the things in knows it must for its own good. Surely this is the case with our government’s inability to shape a sensible, long-term budget plan that steadily reduces a debt load that has long passed the danger line.
Congress is debating the issues as the perennial task of increasing the national debt ceiling so we can borrow more is again upon us. This is a future-defining national challenge in which the facts aren’t lacking, only the courage and responsibility to act on them.
The political noise and policy fog created by a divided Congress, a factionalized media, and more partisanship than good sense from our elected leaders can’t eclipse a basic set of truths. They are cited by the bipartisan Simpson-Bowles Commission and other non-partisan, expert reports, and analyses.
1) America’s debt load is too high for our own good. It exceeds a 100% ratio of debt to GDP, already past the growth-impairing threshold.
2) Under current laws our national budget deficits will mount and the debt will continue to skyrocket. The debt is on a glide path to reach 200% of GDP by 2040.
3) These imbalances are driven predominantly by unsustainable mandatory spending. Entitlements will comprise nearly 80% of the national budget within 10 years.
4) Excessive debt creates an uncertain business climate and puts upward pressure on interest rates which endangers economic growth, job creation and U.S. global competitiveness. Most polls of business leaders cite uncertainty as the greatest impediment to investment, expansion, and risk taking.
5) A national budget that is consumed by mandatory spending leaves little for investments critical to fostering growth and competitiveness -- including for infrastructure, research and development, cyber-security job training and education just to name a few.
6) America must compete for investment in a tightly-contested global economy where the options are many. Massive and unsustainable debt with no reform in sight and a budget that has no room for the investments listed above discourages investors and job creators from taking risks here, impeding our prospects for reinvigorating our economy and righting our budget.
Much of the political debate focuses on the pitfalls of upending the status quo and taking action to reform entitlements so that we can restore America’s fiscal health and long-term competitiveness. It’s time to examine more soberly what will happen in the short-term and long-run if we don’t act. The current path of unrelenting deficits, out of control debt, and reduced prospects is not sustainable model for a successful economy and a strong nation. We all know it.
Several years ago, a European Parliamentarian commenting on the fiscal dysfunction affecting our friends across the Atlantic and the lack of action to solve it said, “We know what to do. We just don’t know how to get reelected after having done it.” He might as well have been speaking for the United States Congress.
That’s not simply a discouraging commentary on our political institutions, it says a lot about us, the electorate. Big challenges with major consequences require hard choices. National economic health, global competitiveness, generational fairness, and our country’s ability to lead in the 21st century are at stake. It’s time to do what we know we must for our own good—while we still can.