President Obama will outline his plan to lead the nation out of its financial mess and cut the $14 trillion national debt in a speech at George Washington University today. The combination of tough choices about taxes, spending and needed social safety nets made us wonder: Is the debt problem solvable?
Here are some different and often opposing takes. The answers range from "cut spending" to "raise taxes" to "change Medicare" to "don't worry so much about it."
Do Everything and Do It Quickly: David Walker, CEO of Comeback America Initiative
There is no question that our deficit and debt challenge is solvable. The real question is will we solve it in a timely, reasoned and reasonable manner in order to avoid a U.S. debt crisis or will it take a crisis for Washington to act?
To solve our deficit and debt challenge, people need to know the facts and ignore the ideological illusions that we can just grow, inflate, cut or tax our way out of our structural deficits. From a policy perspective, we need to engage in entitlement reforms, cut and constrain defense and other spending, and engage in comprehensive tax reform. From a political perspective, everything needs to be on the table and everyone needs to be at the table in order to get the job done.
The debt ceiling limit provides an opportunity to ensure that the Congress and the President ultimately address all the above items. Yes, we need to raise the debt ceiling limit, but it should be coupled with tough statutory budget controls, including debt/GDP targets with automatic enforcement mechanisms, that will take effect no later than 2013.
Cut Spending But Don't Raise Taxes: Grover Norquist, Americans for Tax Reform
When politicians in Washington, D.C. or state capitals say that "no one" wants to reduce government spending, what they mean is that "no lobbyists come to my office and ask us to spend less, all the lobbyists ask for more money for themselves."
That is true.
This is why spending reduction only comes by going over the heads of the lobbyists and their co-dependent collaborators in the appropriations committees.
Reagan did this in 1981 and cut 13 percent of domestic discretionary spending -- twice the size of the 6 percent cut just agreed to last Friday night.
Many governors are showing more courage than President Obama. Governors across the nation are standing with taxpayers and against the spending interests. Governor Rick Perry of Texas, Rick Scott of Florida,Tom Corbett of Pennsylvania, Chris Christie of New Jersey, Scott Walker of Wisconsin, Andrew Cuomo of New York, and John Kasich of Ohio have all demanded and are winning real spending reductions because they first said....We are not raising taxes, end of discussion, we are going to reduce government spending.
In the past politicians have raised taxes rather than govern. It is easier to raise taxes than reform government or say no to spending lobbies with campaign cash in hand.
Democrats in Washington jumped government spending 30% since 2007 when Democrats capture the House and Senate. All we have to do is return to the (already too high) spending levels pre-Nancy Pelosi and Harry Reid. Prying cash from the hands of lobbyists who stole it "fair and square" will be hard work...but it is the only way to undo the damage of the last four years and the bankrupt future we face unless we do a U-turn on spending.
Can the Federal Debt Be Solved?
Raise Taxes on the Rich and Corporations, Protect Social Security and Medicare, More Health Reform: Robert B. Reich, Berkeley Professor and Secretary of Labor under President Clinton
The debt problem can be solved – and we don't have to sacrifice vital public services or Social Security, Medicare, and Medicaid.
It requires two steps.
First, increase taxes on the very wealthy. Their share of national income has been rising for thirty years (from 10 percent to over 20 percent) while their tax rates have been dropping. Before 1981, the marginal income tax rate on the top never dropped below 70 percent. They're now 35 percent. Meanwhile, the estate tax has disappeared for estates valued below $5 million, or $10 million a couple. And the capital gains tax (most of the income of the super-rich comes from capital gains) is now only 15 percent.
Return to the tax rates we had thirty years ago and the richest 1 percent of Americans would contribute about $300 billion more in taxes this year. That's trillions over the next decade – enough to reduce make a major dent in the federal deficit.
Here's the other thing that needs to be done: Control the rise in medical costs. The problem isn't Medicare and Medicaid. They're huge and growing fast only because medical costs underlying are huge and growing fast. Most of us know that because our premiums, co-payments, and deductibles are soaring.
How to control out-of-control medical costs? Allow Medicare and Medicaid to use their massive bargaining leverage with doctors, hospitals, and pharmaceutical companies in order to get lower prices and better deals.
Even more importantly, have them use their leverage to turn the nation's health-care system from a fee-for-as-many-services-as-possible one into a system that is paid for keeping people healthy and providing high-quality care. Medicare and Medicaid would pay a certain amount per patient, and the accountable-care organization would be responsible for outcomes.
Can the Federal Debt Be Solved?
Cut Military Spending, Reform Entitlements, Sell it to the Public: Robert L. Bixby, executive director of The Concord Coalition
Fortunately, there are many possible solutions to the enormous fiscal and economic challenges facing the country. But they will require political courage, bipartisan cooperation and the active support of voters around the country.
Because the projected federal deficits are so large, we need to look at far more than the non-defense spending on which Congress has focused so heavily in recent weeks. The president's fiscal commission as well as other bipartisan groups have recommended a much more comprehensive approach. We must restrain military spending, take more effective action to curb runaway health care costs, and close the costly special-interest subsidies that clutter the tax code.
We must also reform Social Security, Medicare and Medicaid so that they can be sustained and continue to provide essential support for millions of Americans.
Democrats and Republicans must work together on these difficult changes. Otherwise political demagoguery could undermine the reforms. The Senate "Gang of Six" offers the most promising example of such cooperation.
Public engagement is essential as well. Once voters understand the stakes involved – not just for themselves but for future generations -- they become more willing to support the difficult changes that can put the nation on a better course.
The recession is over but the economy is weak and unemployment is high. Then there's the deficit. It's a mountain. And every year, it gets piled on top of the debt, which is now a number with so many zeroes it's impossible to even understand what it means.
Meanwhile, China is booming and the experts say it's only a matter of time -- less than 20 years -- before it overtakes the United States and becomes the world's number one economy.
Lots of people think America's best days are over, that there's only stagnation and decline ahead. They may be right.
That's the story today. But there's something interesting about the preceding paragraphs. Change only one word -- replace "China" with "Japan" -- and they are an exact description of the United States in 1992.
One of the best-selling books that year was a frightening prophecy called "Bankruptcy 1995." That didn't happen, of course. In fact, the opposite did. Contrary to countless expert forecasts, the economy surged, the political system worked, a huge deficit became a huge surplus, and the United States enjoyed a golden age.
This doesn't prove the threat today isn't real, or that predictions of doom will fail. But it does show that nothing is inevitable.
End the Wars, Cut Defense Spending, Tax Corporations and the Wealthy: Justin Ruben, Executive Director of MoveOn.org
To solve this problem, it's important to know where the deficit came from. First, Republicans cut taxes for millionaires and billionaires, leaving a gaping hole in the budget. Then we got into two very long, expensive wars. And then Wall Street tanked our economy.
So to bring the deficit under control, we need to roll back the Bush tax cuts for the wealthy and restore tax rates to what they were during the Clinton years.
We also need to make big corporations pay their fair share. When a company like GE makes billions in profits and pays literally zero in taxes, it's an insult to every hardworking American.
Next we need to wind down these wars and bring defense spending back to the level it was at when George W. Bush took office in 2000.
We need to rein in the power of Big Insurance and Big Pharma, who are driving up health care costs at an unsustainable rate. And finally, we need investments in education and innovation that can keep our economy strong and America competitive.
These are common sense measures that will reduce the deficit and bring the American Dream within reach for millions who are struggling. All are popular with voters, too.
So next time you hear a politician saying we need to fix the deficit by slashing education, or social security, or vital services, take a look at who's paying for their campaigns, and you'll have some idea why they won't talk about the real drivers of the deficit.