American Spending, Not American Debt, is the Biggest Crisis We Face

So where now? We fell part way down the fiscal cliff last week, fixing the tax portion (though not to anybody’s true liking), with the spending and deficit ceiling issues left to deal with in March. There’s still a fair way to fall if we don’t fix the sequester part that will make harsh across-the-board spending cuts in discretionary spending including that for the Pentagon, education and transportation. We also still have the debt-ceiling still to contend with, another cliff likely bigger in effect than the last one.

Do we need another super committee or commission to lay out a grand solution? Been there, got the t-shirt. In 2010 the National Commission on Fiscal Responsibility and Reform laid out a grand solution that would have reduced the yearly federal deficit to zero by 2035 and knocked the national debt down to 40% of GDP from its current 105% of GDP. It is worth reading if only to understand the issues.

The right didn’t like its solutions because it effectively raised taxes for everybody, from $722 a year for the middle fifth of taxpayers to some $8,600 a year for the top fifth. It would have truly put the screws to the top 0.1%, raising those extremely high earners’ taxes by an average of $735,000 a year. The left thought the tax changes were not progressive enough and feared the effect of big entitlement cuts.

It would have cut $50 billion from discretionary spending in the first year, ratcheting that up to $200 billion by 2015. Social Security, Medicare and other entitlements would also have seen “reforms,” (and when you see government use the word “reform” you can be sure they really mean cuts).

Grand solutions tend to get grand raspberries from Congress, though. And the Commission’s proposal was no exception, ending up as no more than a debating point during the presidential campaign.

We may, however, work our way down the cliff to stable ground one decent sized step at a time. As the Center for American Progress points out in a piece on January 8, “Since the start of fiscal year 2011, President Barack Obama has signed into law approximately $2.4 trillion of deficit reduction for the years 2013 through 2022. Nearly three-quarters of that deficit reduction is in the form of spending cuts, while the remaining one-quarter comes from revenue increases.” They add that under today’s policies, debt levels in 2022 — as a share of GDP — will be only slightly higher than they are expected to be by the end of next year.

One of the first steps ought to be to reduce defense spending. That doesn’t mean weakening our military, just modernizing it. A new century calls for a new defense strategy, faster, more mobile, higher tech, less grounded in heavy Cold War-era weaponry and large-size conventional forces. Go to ultra-conservative websites like that of the Heritage Foundation and you will see strident warnings about the purported risks to our national security from defense cuts. But, as the Christian Science Monitor notes, “defense spending fell 26% in constant dollars between 1985 and 1993 – presided over by none other than Dick Cheney, [then Defense secretary and soon to be conservative Vice President under George Bush] who prided himself on having ended more than 100 military acquisition programs.”

It is worth noting that the Commission quoted Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff in 2010 when its report was released, as saying that the most significant threat to our national security is our debt.

A final note, I firmly agree with the Obama administration’s position that the national debt ceiling issue must stand on its own and not be tied to deficit reduction solutions. The national debt ceiling is a cap on how much the Treasury can borrow to pay its bills. It is not a cap, however, on how much the federal government can spend. That’s the province of the federal budget, passed by Congress and signed by the president.

We should use the debt ceiling as an alarm bell, warning us that our spending is seriously out of balance. It should not be used as leverage in the battle over how to reduce the deficit. That would be like telling the world we refuse to pay our past bills because we can’t figure out how to reduce future ones. It solves nothing and just makes our trading partners wonder if the U.S. is good for its debts.

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Drew Mendelson

Look for Drew's latest book, Song Ba To, a novel of the Vietnam War. Drew has been the op-ed writer and crisis communications manager for CA Gov. Gray Davis, Speechwriter and advisor to Phil Angelides & Bill Lockyer. Labor journalist. Other published novels include; Pilgrimage; Marin 2120 AD -- the last two are both sci fi). Currently writing second Vietnam War novel titled, A Shepard to Fools.

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