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The Political Class and the Deficit of Will

In yesterday’s Washington Post, the paper’s Joel Achenbach wrote a long essay in the Outlook section regarding “The national debt and Washington’s deficit of will,” writing:

“Over the past decade, lawmakers have avoided the kind of unpopular decisions -- tax increases, spending cuts or some combination -- needed to keep the debt under control. Federal Reserve Chairman Ben Bernanke testified recently that, for investors, the underlying problem with the debt isn't economic. "At some point, the markets will make a judgment about, really, not our economic capacity but our political ability, our political will, to achieve longer-term sustainability," he said.”

However, he also adds:

“Debt is the grease of Washington legislation; for short-sighted leaders, it is less a political problem than a political solution. As long as the government can continue borrowing at reasonable rates, citizens can have their tax cuts and government services, and eventually the growing debt becomes someone else's problem.”

Achenbach’s essay is worth reading, but let’s turn to a report from the Committee for a Responsible Federal Budget, a bipartisan, non-profit organization that attempts to educate the public about issues with a significant fiscal policy impact. The organization is unique in that most of the officers and directors have headed such organizations as Congress’ budget committees, the Congressional Budget Office, the Office of Management and Budget, and the General Accountability Office.

The Committee’s report reviews the CBO’s analysis of the President’s FY 2011 budget. The report also provides a clear and concise comparison of the CBO’s numbers and the OMB numbers as well as  the deficit impact of various policy changes in the President’s budget. Here is the brief conclusion from the report:

“The warning coming out of this analysis of the President’s budget could not be clearer: the country is on an unsustainable fiscal path. Despite the inclusion of some deficit-reducing policies, the President’s budget would make the situation far worse. The budget would increase the public debt to 90 percent of GDP by 2020 -- a dangerous rise that would be completely irresponsible during a time of economic growth, which the budget assumes will occur.

“Absent major structural policy changes to address the medium-term debt situation, the nation’s economy is at real risk from excessive borrowing. The Administration thus far is leaving the work of addressing this threat to its newly formed fiscal commission. While we support the effort and are hopeful it will be successful, early signs are not promising that it will be.

“It is therefore critical that the Administration develop a “Plan B,” that focuses on reforming spending, the tax code, and budget enforcement procedures. If the commission does not succeed in its effort, the White House will have to take the lead in championing a credible debt reduction plan. The federal government will need to make changes one way or another. We can either enact reforms on our own terms, or wait for the markets to force changes upon us -- an act of fiscal procrastination that would have damaging effects on our economy and standard of living for decades to come.” (emphasis in the original)

As Achenbach says, “Unlike a real Ponzi scheme, which collapses when no new suckers offer money that can be used to pay off earlier investors, the government can restore fiscal sanity whenever our leaders decide to do so.” That is if the political class had any will.

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