Advertisement

Frenzy in Washington grows over nation’s debt

Not since Ross Perot unleashed his wonky charts has the nation’s heavy debt load received so much attention.

Suddenly, it seems, Washington is consumed with the urgent task of lowering the annual deficit and preventing a European-style debt crisis, which experts warn could be but a few years away.

Six senators, meeting behind closed doors, have spent months drafting a bipartisan blueprint that would propose substantial changes to the way the federal government taxes, spends and provides such core services as Medicare and Social Security — all aimed at trying to reduce the nation’s annual $1.4-trillion deficit.

Complaining that the White House has not offered a comprehensive strategy, House Budget Committee Chairman Paul D. Ryan (R-Wis.) is preparing his own battle plan, due out next month.

Advertisement

At the same time, the leaders of President Obama’s now-defunct bipartisan fiscal commission have gone on the road, rather than quietly slip back to their day jobs, trying to raise public support for their proposals.

Then there are the freelancers like Sen. Bob Corker (R-Tenn.), who visited every county in his state last year, talking up fiscal woes with a 21-page PowerPoint presentation.

“We believe comprehensive deficit reduction measures are imperative,” wrote an unusually large group of 64 senators, half Democrats and half Republicans, in a recent letter to Obama. “With a strong signal of support from you, we believe that we can achieve consensus on these important fiscal issues.”

A convergence of political and economic forces has brought budget concerns to the forefront this spring, foreshadowing the politically unpopular vote Congress will soon be asked to take to raise the nation’s legal debt limit.

Advertisement

The “tea party” wing of the electorate has inserted deficit worries into the vernacular in a largely unprecedented way. Their concerns have been articulated by the unusually robust freshman class of Republicans in Congress.

At the same time, sought-after independent voters who often decide elections also want to see Washington make fiscal reforms, polls show.

Lawmakers are also motivated by alarming graphics showing the country’s record debt that are displayed almost daily in closed briefings on the Hill and in presentations by their peers on the House and Senate floors. The nation now borrows about 40 cents for every $1 spent.

For many members of Congress, being able to back a bipartisan deficit-reduction strategy would go a long way toward allaying the concerns of voters — and bond investors — about whether Washington can get its ballooning debt under control.

Advertisement

Still, the prospects for serious budget reform remain a heavy political lift in hyperpartisan Washington, especially in the few months remaining before the start of the 2012 presidential campaign. Political season makes it increasingly difficult to find consensus on much of anything.

Lawmakers are loath to be as bold as Perot, a candidate for president in 1992 and 1996, who suggested new taxes and cuts to popular entitlement programs.

But budget experts from both parties say only a comprehensive overhaul of the nation’s revenue and expenditure streams will curb the mounting debt crisis, and they scoff at the debate that will resume this week over 2011 spending reductions that focus on a tiny slice of the budget.

“This is like a stink bomb in the garden party: It isn’t going away, and neither are we,” said former Sen. Alan Simpson (R-Wyo.), a co-chairman of Obama’s fiscal commission, in announcing its public campaign.

Advertisement

At nearly $14.3 trillion, the national debt now accounts for about 60% of the nation’s gross domestic output. Not since World War II has the ratio been so large.

Both parties share blame for having avoided the tough decisions they now face. President Clinton was able to leave office in 2001 boasting of a balanced budget, but annual deficits emerged again during President George W. Bush’s administration. Tax cuts, war spending, rising Medicare costs and the economic downturn all played a role.

Deficits have jumped again under Obama as tax revenue crashed during the recession and Congress approved enormous outlays to shore up state governments and provide unemployment benefits and other recessionary aid.

Unprecedented federal expenditures to bail out Wall Street have largely been repaid, and aid to the auto industry is expected to be returned. But costs continue to mount in housing, with taxpayer funds going to the ailing mortgage agencies.

Advertisement

Without substantial changes in government policies, debt could reach 90% of gross domestic product by the end of the decade, according to the nonpartisan Congressional Budget Office — a danger zone, experts say.

“The situation has become so bad that even economic growth can’t get us back into the black,” said Eugene Steuerle, a senior fellow at the Urban Institute, in recent congressional testimony.

In presenting his 2012 budget last month, Obama declined to incorporate many recommendations of his fiscal commission, which made sweeping proposals that would affect almost every American adult. Among the most controversial: slowly raise the retirement age for Social Security, end the mortgage interest deduction after the first $1 million value of a home, eliminate corporate tax loopholes and vastly reduce government spending.

House Republicans rushed to fill the void, promising that Ryan’s proposal would tackle the thorny issues of Medicare and Social Security that they said the president “ducked.”

Advertisement

But House Republicans appear hesitant to take up the other side of the ledger — tax policy — for fear of being called out by conservative groups as raising taxes. Democrats have similarly tried to avoid the hot-button issue of Social Security, a nod to senior voters they will need in 2012.

The so-called Gang of Six bipartisan group of senators — which meets behind closed doors again Tuesday — continues to put all policy options on the table, according to sources close to the negotiations.

Some see this era of divided government as the best chance to find consensus. They point to tax overhaul under President Reagan in 1986 and the balanced budgets achieved during the Clinton administration — presidents working with the other party in Congress.

“This is a moment in time for this body, colleagues in the House and the president and others to come together,” said Sen. Mark R. Warner (D-Va.) who, along with Sen. Saxby Chambliss (R-Ga.), created the Gang of Six.

Advertisement

But just to be sure, Warner and Chambliss will be on the road again next month, taking their case to the people.

lisa.mascaro@latimes.com


Advertisement