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The lion’s share is “mandatory” spending, especially in retirement programs, plus farm subsidies. Republicans used to favor limiting Medicare cost increases, but lately they’ve become as eager to curry favor with seniors as Democrats always have been.
And they continue to be. When Simpson and Bowles unveiled their proposal, outgoing Speaker Nancy Pelosi (D-Calif.) declared it “unacceptable” because it relied too much (75 percent) on spending cuts and not enough (25 percent) on tax increases.
But according to the Congressional Budget Office, in 2020 federal revenues will represent 19.6 percent of gross domestic product — compared with the historic average of 18 percent — and spending will be 25.2 percent, whereas the historic average is 20 percent.
So what will it take to convince the public? Debt commissions make good points, but they need to make them in terms ordinary voters can understand.
For instance, as Bowles says, by 2020 interest on the national debt will be $1 trillion — more than the defense budget — and it will have to be borrowed from foreigners, chiefly China, a rival, not a friend.
Is that scary enough? How about the statement of the co-chairmen of another debt commission, former Sen. Pete Domenici (R-N.M.) and former White House budget director Alice Rivlin, about what could happen if America’s foreign creditors stop lending to the U.S.?
They said this “will increase interest rates ... [and] could also send the value of the dollar plunging overseas, which could trigger runaway inflation and still higher interest rates.
“Rising debt and rising interest costs could evolve into a ‘death spiral,’ with the two feeding off each other in an ever more vicious cycle,” they said. It would be a “catastrophe.”
I think what the experts have in mind is that Americans might have to carry their worthless dollars around in bushel baskets, that unemployment would skyrocket and that, unable to invest, America’s productivity and standard of living would crater, along with its leadership in the world.
It’s scary, all right. But somebody’s got to describe it in such graphic terms as to “scare the hell” out of the nation. Obama ought to build next year’s State of the Union address around this goal.