For the past several months, I have been privileged to be one of 19 people chosen to serve on the Bipartisan Policy Center’s U.S. Debt Reduction Task Force. The Task Force was chaired by former U.S. Senator Peter Domenici, who led the Finance Committee during his 36 years in the Senate, and Dr. Alice Rivlin of the Brookings Institute, who was the first head of the Congressional Budget Office and later directed President Clinton’s Office of Management and Budget, and currently serves on President Obama’s Deficit Reduction Commission. Our Task Force colleagues included two former governors, two former Cabinet secretaries, two big city mayors, and representatives of business and organized labor.
The findings and recommendations of our Task Force were released in Washington, DC on November 17. Whatever you may think of the solutions we propose, I was impressed that such a diverse group could agree on a plan to get the federal deficit under control and start bringing down our debt. I would encourage you to read our report, which is available at www.bipartisanpolicy.org.
For all the time I have spent in public administration and public policy over the years, I had no idea of the depth and breadth and long-term impact of the Federal debt. You may be as surprised as I was to learn:
- The U.S. debt owed to third parties (like China) now exceeds 60 percent of our GDP.
- If we stay the course we’re on, the U.S. debt will exceed 100 percent of GDP by 2020 and 200 percent of GDP by 2030.
- Interest alone on the U.S. debt will reach $1 trillion by 2020.
- At this pace, current U.S. revenue in 2020 will cover only interest costs, Social Security obligations, and Medicare obligations – nothing else.
The goal of our Task Force was to develop bipartisan recommendations to stabilize the debt to third parties at the current 60 percent of GDP through 2020. Although that may sound modest, the price tag to meet this objective is a staggering $7 trillion over the next nine years!
In developing our recommendations, we looked at a number of options, but it became clear that cost-saving measures alone would not get the job done, given the reality of what revenue will have to cover in 2020. It was also clear that government couldn’t just increase taxes or rely on economic growth to close the gap; even if one assumes the economy will grow two full percentage points faster than it has over the last decade.
In the end, we determined that a comprehensive plan that includes policy changes, program elimination, cost reductions and possibly, balance sheet asset restructuring, and then revenue enhancements, is necessary to fill the remaining budget gap.
Mr. Robert N. Campbell III is Vice Chairman, Principal, Deloitte LLP and is the U.S. State Government Leader, based in Austin.
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