US debt: We can run, but we can't hide (Obama tax deal or not)
Tackling the $13.8 trillion federal debt isn't a partisan issue. It's a matter of America's future prosperity. Extending Bush-era tax cuts may make economic sense now, but President Obama and Congress must come together and make tough decisions to cut spending and raise revenue.
Every business person, and anyone who has ever managed a checkbook, knows you can’t survive by borrowing 40 cents of every dollar you spend. Yet this is what our federal government is doing – with no real improvement projected even after the economy recovers.Skip to next paragraph
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Tax cuts, trillion-dollar wars, deep recession, and the spending binge of the past 10 years have boosted our national debt to $13.8 trillion, over 90 percent of our total national output (GDP). This is two and a half times what it was 10 short years ago. Underfunded Social Security, Medicare and other entitlement benefits add another staggering $50 trillion to what the nation is obligated to borrow. That equates to about $200,000 in debt for every man, woman, and child in our country.
The country is broke and our lenders are about to run out of patience. As it has already done with Greece and Ireland, the international financial community can at any time begin “voting with its feet,” abandoning our debt for safer investments like commodities, land, or foreign securities. Doing so would cause the dollar to collapse and interest rates to surge. This would trigger renewed recession and a sharp decline in living standards since there is virtually nothing we Americans drive, wear, or work with that doesn’t have substantial foreign labor or material content.
Longer term, it also heralds inflation, since a poorer America with a weakened economy may have little choice but to accelerate the printing presses to service our towering debt burden. Our friends abroad, and even the International Monetary Fund, lack the resources – and perhaps the will – to bail us out.
To avert this catastrophe, the president and the new Congress must put their political differences aside and forge a bipartisan consensus to do what’s necessary for us to remain a global superpower, and for our children to have a future.
A bipartisan plan to cut the deficit
A bipartisan majority of the president’s deficit commission has endorsed a detailed plan to make the necessary changes. It cuts government spending and raises taxes, tackling even such sacred cows as defense spending, the Social Security retirement age, and the home mortgage interest deduction. An even tougher proposal has been unveiled by former Democratic budget director Alice Rivlin and former Sen. Pete Domenici (R) of New Mexico – both of the Bi-Partisan Policy Center. While we can debate the details, these plans present a template for the type of hard decisions our country must make.