02/ 11/ 2008
by Sens. Kent Conrad and Judd Gregg, and Reps. Jim Cooper and Frank Wolf
Looks to Address Nation's Long-Term Fiscal Crisis
As members of Congress from different political parties, we do not always agree on fiscal policy. But we do agree on this: Our nation will soon confront one of its greatest fiscal challenges, and it is our responsibility as elected leaders to work together on a solution that will best serve American citizens and the long-term health of the economy.
Too few people recognize the seriousness of America's long-term budget outlook. Long-term projections show an unsustainable imbalance between spending and revenues that simply cannot be corrected by economic growth alone. With health costs exploding and millions of baby boomers on the cusp of retirement, the country faces a massive budget shortfall. Health care entitlements and Social Security alone will absorb an increasingly larger portion of the federal budget--20 percent of GDP by 2055, equal to the entire federal government today--and there is no contingency plan in place. We are heading toward a fiscal crisis of epic proportions, and it threatens to drown the government in a sea of red ink.
You don't have to take our word for it. Comptroller General David Walker has been traveling the country with a bipartisan group of experts who warn that if we continue on our current course, we will destroy America's economic strength. By 2040, according to GAO projections, in order to balance the federal budget, we will either have to cut spending by 60 percent or raise taxes to twice today's level. In December, Congressional Budget Office Director Peter Orszag testified that accumulated government debt could lower the country's gross national product by 25 percent by 2050. In his words, “rising deficits would also lead to significant economic harm.”
The longer we wait to tackle this crisis, the worse it gets. Thanks to compounding interest, every year we delay action costs us hundreds of billions of dollars in the future. According to Standard and Poor's, American Treasury Bonds could lose their AAA credit rating by 2012, reaching junk status by 2025. National savings will be depleted, capital costs will rise and foreign investment will dry up. In short, American businesses will be hard-pressed to survive the fiscal crisis.
The enormity, complexity and urgency of this problem demand bipartisan solutions. Only by working together can we begin to tame this problem. We will have to put all solutions on the table--from both the spending and revenue sides of the budget--and work in a spirit of common purpose and shared sacrifice.
The four of us--two Democrats and two Republicans--hope to provide a framework for this discussion. We believe Congress must create a bipartisan task force that would study the problem and propose solutions to close our fiscal gap. These policy recommendations would be guaranteed a vote in Congress. While differences exist between our proposals, we are unified in our belief that Congress must act soon, must act in a bipartisan fashion and must make hard choices today. America's economic future is at stake.
We appreciate that NFIB members recognize the urgency of our fiscal outlook, and we urge you to make your voice heard on Capitol Hill. It is important for our colleagues and the administration to see the growing support for our proposals from key policy experts and outside groups such as NFIB. The time to act is now. Our children and grandchildren cannot afford for us to delay any longer.
