Time is tight for the US's financial future

The following editorial appeared in the Chicago Tribune:


Too many TV talking heads, on too much caffeine, have predicted that the U.S. will endure a public debt debacle akin to what for two years has roiled Greece. That’s probably an exaggeration. But the current images of violent anti-austerity protests in Athens — mobs attacking police, petrol bombs and tear gas canisters exploding, smoke from arson fires obscuring the Acropolis — these chilling scenes do offer a useful glimpse at one effect of rampant overspending: Many ordinary citizens deeply resent being told that, because their politicians didn’t live within budgets, a nation’s free-spending lifestyle now must radically constrict.

No, the U.S. isn’t Greece and may never be. Which isn’t unrelievedly good news: There, pols and citizens — even those driving this two-day national strike by the country’s two main unions — reluctantly appreciate that they have lived far beyond their means. Here, official Washington continues to borrow some $3 million a minute, every minute of every day, to support all the spending that federal tax revenues cannot.

Americans are less than a month from learning whether their government can interrupt that downward and ultimately doomed spiral. By Nov. 23, the bipartisan “supercommittee” of 12 Senate and House members is supposed to produce legislation that would reduce federal deficits by at least $1.2 trillion over 10 years.

Reports from the front suggest that the committee, despite having received close to 180,000 recommendations on where to cut spending or raise revenues, hasn’t made much progress. We hope disturbing news from the Congressional Budget Office will — oops, with Greece on our minds, we almost said “will light a fire.” The CBO’s bad and worsening news: During fiscal 2011, which concluded three weeks ago, the U.S. government spent a record $3.6 trillion — including a deficit that increased to just under $1.3 trillion. That deficit alone is 8.6 percent of our gross domestic product. By comparison: As recently as 2007, the federal deficit was a modest $161 billion, or a mere 1.2 percent of GDP.

If you’ll tolerate one more downbeat trend: Federal debt held by the public has exploded, from 40 percent of GDP three years ago to about 72 percent now. Any reversal probably will have to originate on Capitol Hill. The nonpartisan Committee for a Responsible Federal Budget says President Barack Obama’s proposal to the supercommittee, despite his stated desire that it Go Big, “fails to put the debt on a clear downward path as a share of the economy” and “is unlikely to sufficiently control long-term deficits and debts.”

That White House plan is just impossible to square with the August warning from Standard & Poor’s managing director John Chambers after his agency dropped the U.S. government’s long-impeccable rating of creditworthiness. Chambers put the chance of yet another drop at 1-in-3 — and warned that to reclaim the lost rating, U.S. leaders must unite and deliver “stabilization and eventual decline” of the government’s runaway debt.

All of this puts a burden on The Deficits Dozen to reach a solution that the full House, full Senate and the White House refused to reach this summer when the possibility of a default on U.S. bond interest payments supposedly loomed. For decades our leaders have hoped some politically risk-free solution somehow would emerge from a litany of blue-ribbon panels and commissions. The supercommittee is a vague expression of low hope by the rest of Congress that this time is the charm.

Not going to happen. If the supercommittee does draft a plan, it will require more courage of Congress than Congress wants to invoke. We’re sticking to our proposal that deficit reduction rest on a 3- or 4-to-1 mix of spending cuts — especially of entitlement programs — and revenue increases.

Reaching such a solution isn’t only crucial to the financial future of the republic. Right now, many employers who could create jobs are afraid to hire workers. They look at the astonishing government spending obligations of Washington, and of insolvent states such as Illinois, and wonder what massive tax increases await them.

We don’t know what the supercommittee, which meets behind closed doors, currently contemplates. Reports last week from Politico, The New York Times and the Tribune’s Washington Bureau aren’t exactly stoking the optimism we’ve tried to maintain. One account from a House Republican aide has Sen. John Kerry, D-Mass., out-talking all the other members, and irking many of them as he prattles: “It’s what I would call Senate talk,” the aide related. “It’s like a waterfall of words. It never gets you anyplace.”

If ever Congress needed a committee to get someplace, it’s this one. Failure to produce a long-term fix will revive the public’s debt-fueled fury (See November, 2010) just as another election year arrives. If the supercommittee, the rest of Congress and the White House again fail, we wouldn’t expect to see mobs in the streets with Molotov cocktails flying overhead. We would, though, expect to see an inordinate number of Washington pols wistfully cleaning out their offices.


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