Friday, June 24, 2005

News of lasting importance

Almost Unnoticed, Bipartisan Budget Anxiety
The chickens will com home to roost in 2040. All emphasis is mine. Quoth the WaPo:
The timing could not have been more apt. On the eve of a titanic partisan clash in the Senate, eggheads of the left and right got together yesterday to warn both parties that they are ignoring the country's most pressing problem: that the United States is turning into Argentina.

It's a measure of how screwed up the political atmospherre is DC is. If the author, Dana Milbank, hadn't set the bipartisan bonafides in the first paragraph, a disturbingly large part of the readership would have filed it in a convenient little box ("they're attacking social security again" or "the liberals are blaming GWB again.").

While Washington plunged into a procedural fight over a pair of judicial nominees, Stuart Butler, head of domestic policy at the conservative Heritage Foundation, and Isabel Sawhill, director of the left-leaning Brookings Institution's economic studies program, sat down with Comptroller General David M. Walker to bemoan what they jointly called the budget "nightmare."

And here's an example of why I call myself neither democrat nor republican:

There were no cameras, not a single microphone, and no evidence of a lawmaker or Bush administration official in the room -- just some hungry congressional staffers and boxes of sandwiches from Corner Bakery. But what the three spoke about will have greater consequences than the current fuss over filibusters and Tom DeLay's travel.

With startling unanimity, they agreed that without some combination of big tax increases and major cuts in Medicare, Social Security and most other spending, the country will fall victim to the huge debt and soaring interest rates that collapsed Argentina's economy and caused riots in its streets a few years ago.

"The only thing the United States is able to do a little after 2040 is pay interest on massive and growing federal debt," Walker said. "The model blows up in the mid-2040s. What does that mean? Argentina."

Got that? The only thing. Right out of the starting gate, the liberal concurs:

"All true," Sawhill, a budget official in the Clinton administration, concurred.

And the conservative agrees:

"To do nothing," Butler added, "would lead to deficits of the scale we've never seen in this country or any major in industrialized country. We've seen them in Argentina. That's a chilling thought, but it would mean that."

Each of the three had a separate slide show, but the numbers and forecasts were interchangeable.

Walker put U.S. debt and obligations at $45 trillion in current dollars -- almost as much as the total net worth of all Americans, or $150,000 per person. Balancing the budget in 2040, he said, could require cutting total federal spending as much as 60 percent or raising taxes to 2 1/2 times today's levels.

Butler (the conservative) pointed out that without changes to Social Security and Medicare, in 25 years either a quarter of discretionary spending would need to be cut or U.S. tax rates would have to approach European levels. Putting it slightly differently, Sawhill (the liberal) posed a choice of 10 percent cuts in spending and much larger cuts in Social Security and Medicare, or a 40 percent increase in government spending relative to the size of the economy, and equivalent tax increases.

The unity of the bespectacled presenters was impressive -- and it made their conclusion all the more depressing. As Ron Haskins, a former Bush White House official and current Brookings scholar, said when introducing the thinkers: "If Heritage and Brookings agree on something, there must be something to it."
--snip--

Courtesy of the Washington Post. Read it all here. Or click on the link at the head of this post.

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