Congress and the president have squabbled over the federal budget for years. The super committee, debt limit standoffs, sequestration and other flashpoints failed to generate serious reforms America needs. Meanwhile, a debt ogre lurks in the shadows, ready to bludgeon the nation. Few people know it is there, and fewer want to talk about it.
Earlier this month, the Office of Management and Budget revised its projected 2013 deficit to $759 billion. That is good news only insofar as it is less than originally forecast and down from recent years when deficits topped $1 trillion.
This year's deficit, whatever it ultimately winds up being, will add to the national debt, which stands at $16.7 trillion, about $53,000 for each man, woman and child in the country.
Budget debates usually focus on those two elements, the deficit and the debt, but there is a third part that should worry Americans even more. The Mercatus Center at George Mason University recently reminded everyone that promised outlays to Social Security, Medicare, Medicaid and other programs dwarf the deficit and debt.
Calculations vary, but the baseline additional obligations total $55 trillion worth of unfunded liabilities.
And it might be even worse than that. When former chairman of the Securities and Exchange Commission Chris Cox and former chairman of the House Ways and Means Committee Bill Archer looked at the data last year, they found $87 trillion worth of unfunded liabilities. Respected Boston University economist Laurence Kotlikoff studied the fiscal gap out many years and found $222 trillion.
Lawmakers could bend the curve with sensible entitlement reform, but Congress would quickly block those efforts. Even if reforms could pass, they would be only a start. The long-term fiscal situation would improve but remain desperate.
America has a spending problem. The longer Washington waits to rein in out-of-control expenditures, the larger the debt becomes. Insolvency waits down that road.
The nation also has a revenue problem, albeit a smaller one. Fundamental tax reform is needed that simplifies the code and makes it fairer while bringing in more dollars.
Yet politicians on both sides of the political spectrum eschew compromise that would combine significant spending cuts with modest new revenue. Instead, they seek political advantage at the expense of solutions.30 comments on this story
The bipartisan Bowles-Simpson framework offered a good starting point for discussion. Revised in February, it proposed $2.4 trillion worth of savings over a decade by means of cuts and tax changes. The Washington establishment yawned and went back to bickering.
Utah Sen. Orrin Hatch is uniquely positioned to lead a serious discussion about the long-term fiscal crisis that approaches. He is the ranking Republican on the Senate Finance Committee. He also has announced he will not seek re-election, so he can reach across party lines to build a coalition of lawmakers willing to act. Compromise is possible, but it will require statesmen who first admit the problem is far more dire than has been recognized.