I.O.U.S.A - Addison Wiggin [44]
And at the current rate, the numbers only get worse. By January 2009, the U.S. federal debt will be over $ 10 trillion.
The federal fi scal hole will be around $ 56 trillion. And with each passing moment, your share, your children ’ s share, and your grandchildren ’ s share goes up. Whatever measuring stick you care to use, the long - term fi nances of the federal government and, by extension, the national economy are dismal and getting worse at an alarming rate.
In July 2008, the Peter G. Peterson Foundation published a “ Citizens Guide to the Financial Condition of the United States ” to help focus critical public attention on the fi nancial challenges facing the nation. What follows is a summary of the publication ’ s “ What ’ s at stake ” section, and the accompa-nying box lists the Foundation ’ s recommended solutions.
c05.indd 86
8/26/08 9:00:54 PM
Chapter 5 The Leadership Defi cit 87
• Tax and spending policies in place today lay claim to future resources. Without signifi cant changes, policy makers in the future will — and in some cases already do — have their hands tied.
• Today ’ s defi cits reduce national savings, which dramatically decreases productive investment and wealth -
creating activities. Increased indebtedness to foreign lenders puts future fi nancial decisions in the hands of people who may or may not have our interests in mind when they make them. Further, interest payments that have historically stayed at home now provide more and more income to investors abroad.
• At the current rate, with existing laws, by 2040 the federal government will be spending twice as much as it takes in from taxes. Just 12 years after that, in 2052, spending will outpace tax revenues by more than three to one.
While we ’ re accustomed to dismissing these dates as far off in the future, decisions being made today are all but locking in these outcomes.
• Our children and grandchildren already face a more competitive, challenging, and uncertain world than most Americans have grown accustomed to. Failing to recognize the fi scal crisis represented by falling savings rates and rising defi cits is tantamount to throwing in the towel and leaving them to clean up a doozy of a fi scal mess.
All is not lost, though. Bob Some people say, well this is all Bixby, during one of our fi rst inter-gloom and doom. You ’ re talking
views, echoed the sentiments of the about all these terrible numbers and statistics. But if this were
entire team working on the project. gloom and doom, we wouldn ’ t He said, “ Some people say, well this be doing it.
is all gloom and doom. You ’ re talk-
— BOB BIXBY
ing about all these terrible numbers
and statistics. But if this were gloom and doom, we wouldn ’ t be doing it. ”
c05.indd 87
8/26/08 9:00:54 PM
88 The
Mission
The Hit List
According to the Peterson Foundation ’ s “ Citizen ’ s Guide, ” here ’ s a hit list of actions that we should take.
We as a nation must wake up and take some challenging, yet necessary, steps to put our fi scal house in order:
• Demand that Washington policy makers address these defi cits and that candidates for offi ce disclose their proposed solutions.
• Rethink our priorities. We should not expect the federal government to do what we ’ re not willing to pay for.
• Recognize there are no easy answers. Economic growth is essential, but these problems are so big, we ’ ll never be able to grow our way out of them.
• Face up to critical policy trade offs:
• Reinstitute tough budget controls, like the “ pay - go ” rules that expired in 2002.
The government needs to stop digging the fi scal hole deeper.
• Reform the entitlement programs — Social Security, Medicare and Medicaid —
to reign in spending growth. With the onslaught of retirees now beginning to use the system it needs to be more effi cient, effective, and sustainable.
Otherwise it ’ s going to gobble all the revenues the government needs to perform day - to - day operations.
• Eliminate low - priority programs to cut spending growth.
• Reform the tax code to make