Debt Becomes Us 

The current national debt only scratches the surface of the fiscal hole we will dig as the baby boomers retire.

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In his campaign for the U.S. Senate in 2008, Mark Warner branded himself as a radical centrist. But after he trounced Republican Jim Gilmore in an election that also brought to power a Democratic president and a Democratic majority in both the House and Senate, Warner fell short of this promise. Ultimately, he joined his Democratic colleagues on the big issues of the last Congress — economic stimulus and health-care reform.

But the conditions have changed. Republicans now have a majority in the House of Representatives and are likely to gain more seats in the Senate. The public has grown skeptical of government and more anxious about the future; the recession has stubbornly outlived much of the Democrats' stimulus plan; and the national debt is soaring to unsustainable levels.

The news media also are on edge and looking for answers. President Obama recently observed that members of the Washington press corps were "impatient" with how little his budget plan would do to stem the tide of red ink and confront the massive future costs of entitlement programs: Social Security, Medicare and Medicaid.

In this context, Warner has refocused on the center — a place where serious Democrats and Republicans look for ways to reconcile their differences and offer solutions to deal with the nation's grave fiscal situation. Working primarily with Republican Saxby Chambliss, Warner is among U.S. senators who are developing a package of spending cuts, revenue increases and procedures to reduce the debt. For the sake of America's future, the rest of us — especially President Obama and party leaders in Congress — should join them.

The debt crisis facing this country is so far beyond the average person's experience or imagination that it often is impossible to fathom. So let's set aside the numbers and focus on the key, undisputed facts of our current situation.

Annual deficits have reached historic and unprecedented levels. Persistent annual deficits have created a national debt that is very large and is projected to grow very rapidly, an increasing portion of which is held by investors outside of the United States.

But the current national debt only scratches the surface of the fiscal hole we will dig as the baby boomers retire. The vast majority of federal spending is distributed through entitlement programs, especially Medicare, Medicaid and Social Security, most of which goes to an elderly population that is about to double in size.

In sum, the federal government serves primarily as check-writing machine, and for the foreseeable future a much larger portion of cash is going to be flowing out through transfer payments rather than flowing in through tax revenues.

We should be very concerned about the debt for at least four reasons. First, a debt this size leads to inflation at best and hyperinflation combined with recession at worst. Second, investors ultimately will lose confidence in our ability to finance the debt, which will severely weaken the dollar and fuel even higher interest rates. Third, as we have seen in other countries and in certain states, poorly managed debt can result in chaos and political instability.

Fourth, the bill for the credit-card binge of yesterday's and today's so-called adults will fall into the laps of our children and grandchildren at a time when the work force will be shrinking dramatically as the dependent elderly population increases. That means the next generation will face much higher taxes and a much lower standard of living.

How did we get into this situation? To make a long story short, for the past 50 years, Democratic and Republican politicians have enacted programs that we, the people, have decided we can't live without, but that we don't want to pay for.

Both parties are to blame and both will have to give ground on their cherished priorities in order to reduce the debt burden. Entitlement spending must be reduced. Revenues in the form of taxes must be raised because increasing numbers of truly dependent elderly people will need the health care and income support that can only come from working taxpayers.

The problem is too big and commitments are too ingrained to be managed with either spending cuts or tax increases alone. Trying to cover the cost with taxes alone will severely weaken economic growth and exacerbate the generational imbalance that already exists.

It is in the interests of both parties to deal with the debt crisis sooner rather than later. The longer each side waits, the harder it will be for either of them to satisfy their policy goals in the future. If the economic situation gets worse — and trust me, it can get much worse — then tax increases and benefit cuts will need to be much larger.

For those who believe efforts by Warner and others are futile, consider that two recent presidents, one from each party, joined with congressional leaders from both sides of the aisle to take similar actions. In 1983, Republican Ronald Reagan and Democratic Speaker Tip O'Neill extended the life of the Social Security program. In 1997, Democrat Bill Clinton joined Republican leaders Newt Gingrich and Trent Lott to pass a plan that led to the last balanced budget. In both cases, policy makers prodded party leaders to take bold action, much like Warner and the House budget committee chair, Paul Ryan, R-Illinois, are doing today.

Of course, the center is not for everyone. The politically safe route is for Democratic and Republican leaders to criticize and blame each other, deny the problem, retreat to the respective bases of their parties and, as President Obama has put it, "kick the can down the road." But tactics that may be politically beneficial to each party individually are bad for the country.

To save our country from financial ruin, we should support politicians who are willing to exercise real leadership. Warner and his colleagues are doing precisely what we should ask our elected officials to do — tell the truth, face the tough challenges and work together to advance real solutions to the nation's truly important problems. S

Daniel J. Palazzolo is a professor of political science at the University of Richmond.

Opinions expressed on the Back Page are those of the writer and not necessarily those of Style Weekly.

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