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Friday, October 4, 2013

Budget battles ignore long-term issues

Entirely missing from the fight over the budget continuing resolution and national debt limit is any effort to correct or even discuss our flagrant and reckless long-term fiscal imbalance. New Congressional Budget Office projections released last week update warnings about our nation’s grim financial future under political business as usual.

Current federal debt plus unfunded future promises for Social Security, federal health care programs including the Affordable Care Act, and accumulating interest on the growing national debt is now in the range of $100 trillion. Each household’s share of this unfathomably large number is about $1 million. ...

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Entirely missing from the fight over the budget continuing resolution and national debt limit is any effort to correct or even discuss our flagrant and reckless long-term fiscal imbalance. New Congressional Budget Office projections released last week update warnings about our nation’s grim financial future under political business as usual.

Current federal debt plus unfunded future promises for Social Security, federal health care programs including the Affordable Care Act, and accumulating interest on the growing national debt is now in the range of $100 trillion. Each household’s share of this unfathomably large number is about $1 million.

Continuing inaction on America’s long-term fiscal imbalance is a blatant act of intergenerational theft, being perpetrated on our children and grandchildren. Within a few years, deficit spending and ruinous debt accumulation will crowd out private spending and investment and sharply reduce economic growth for all of us.

Today, the best we can expect from Congress and the president is yet another year of budget-by-continuing-resolution and another year of kicking the debt and deficit can down the road. This fiscally adolescent behavior is enabled only because we still have the world’s reserve currency and because the Federal Reserve Board, on its own initiative, has chosen to print trillions of new dollars to pay the nation’s bills. If this continues and we do not bring the federal budget into long-term balance sometime during the coming few years, America will face the risk of a sudden currency collapse, hyperinflation, or a severe spike in interest rates.

To avoid these threats to the entire U.S. and world economies, Congress and the president must reach a grand bargain to bring spending and taxes into long-term balance. Here are the outlines of a potential route to such a grand bargain:

n Pass a clean continuing resolution, delay implementation of the UnAffordable Care Act by one year and adopt a federal debt limit increase sufficient to pay the nation’s bills for another year.

n During this one-year window, Congress should adopt the “super-committee” long-term budget approach and expand the super-committee’s purview to include finding a replacement for the UnAffordable Care Act. The super-committee process should be modified so that that the American public is fully informed and engaged – both online and in open town hall meeting forums – in weighing all options. That would better protect the views of congressional minorities on the right and the left. The super-committee’s final long-term budget and health care reform proposal – if one emerges – would be approved only by a vote of three-fifths of the members of both bodies of Congress and signed by the president.

I personally advocate a long-term budget solution that balances at about 18 percent of national gross domestic product. Achieving this will not be possible without a gradual and substantial reduction in health care spending as a percentage of the overall economy, which the UnAffordable Care Act completely fails to do. A replacement for the Affordable Care Act must reduce America’s highest-in-the-world health care costs, improve health care quality and outcomes – which are about average among industrialized nations – and expand access and choices for both primary care and catastrophic health insurance.

Jim Rubens, of Hanover, is a Republican candidate for U.S. Senate.