I.O.U.S.A - Addison Wiggin [19]
Judd Gregg, the Republican leader in the Senate Budget Committee, puts the looming problems of these unfunded liabilities this way: “ The only issue more severe than this is the idea that an Islamic fundamentalist would get his or her hands on a nuclear weapon and use it against us. Beyond that there ’ s nothing more severe than this. ”
Gregg goes on to state that the The retirement of the baby boom-retirement of the baby boomers rep-
ers represents the potential fi scal
resents “ the potential fi scal meltdown meltdown of this nation . . . and of this nation . . . and absolutely guar-absolutely guarantees, if it’s not
addressed, that our children will
antees, if it ’ s not addressed, that our have less of a quality of life then children will have less of a quality of we’ve had . . . that they will have a life then we ’ ve had . . . that they will government they can’t afford . . .
have a government they can ’ t afford and that we will be demanding so
. . . and that we will be demanding so much of them in taxes that they much of them in taxes that they will will not have the money to send their kids to college or buy a home
not have the money to send their kids or just live a good quality of life.
to college or buy a home or just live a —JUDD GREGG
good quality of life. ”
These grave warnings from leaders in both political parties have largely fallen on deaf ears, but we believe Americans can no longer hide from them. Simple economics dictate that you may be able to spend more than you take in for a long time, but you cannot do it forever.
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32 The
Mission
What Is a Budget Defi cit?
In the 1970s, the members of Congress believed they needed a budget offi ce that would help them look at the federal budget and make decisions about it the way the Offi ce of Management and Budget helps the president make his decisions. So in 1974 they passed a law called the Budget Reform Act of 1974 that set up the Congressional Budget Offi ce (CBO).
The data that the CBO generates, then and now, are the most commonly used numbers in and around Washington.
Ostensibly, this Offi ce was created to give the Congress a solid, nonpartisan, professional set of numbers. While there is always some uncertainty regarding the numbers, the CBO
does not have any political axe to grind. They work for both the House and the Senate, and they work for the Republicans and the Democrats, and are regarded among those bodies and the press as a reliable source of statistics for measuring the health of the federal government and the economy.
“ I was very lucky, ” Alice Rivlin told us when we met her for the interview in her offi ce in Washington. Ms. Rivlin was the fi rst director of the Congressional Budget Offi ce in 1975.
“ I was there eight and a half years. I loved it. It was a fascinating thing to do. I loved it in part because I like working for the Congress. It is a very interesting group of people, and the issues are interesting. And I think I also liked it because it was entrepreneurial. I got to set up this whole new organization.
That is a little bit like starting a new company. ”
Ms. Rivlin has been fascinated with the “ dismal science ”
ever since she took a summer school class in economics in college, and hasn ’ t looked back ever since. Passionate about how taxes, budgets, welfare, and public policies affect people and the economy, she is currently an economist at the Brookings Institution, an independent research and policy institute in Washington, which is also involved in the Fiscal Wake - Up Tour.
“ Defi cits matter, ” says Rivlin. “ A defi cit occurs when the federal government is spending more than it ’ s taking in in c02.indd 32
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Chapter 2 The Budget Defi cit 33
revenues, and that means it has to borrow money. We are not Defi cit: A defi cit paying for the government ’ s services we are asking our govern- occurs when the ment to provide. ”
federal government
is spending more
The government, in turn,