America’s Debt Problem is Becoming More of a Discussion Topic These Days, with Legislation Being Introduced in Both the U.S. House and Senate
|It’s been almost thirteen years since the Simpson-Bowles National Commission on Fiscal Responsibility and Reform provided its recommendations on how to address America’s out-of-control spending problem.
Anyone who remembers the commission and its recommendations knows that it put forth bi-partisan, realistic suggestions to address the country’s fiscal issues. And, those who are familiar with Simpson-Bowles also are aware absolutely nothing was done with the commission’s recommendations.
Fast forward thirteen years and America has dug itself even deeper into a fiscal mess, amassing over $33 trillion in debt…the last $5 trillion coming fast and furious since 2021.
I’ve been writing about this problem since the Great Recession, trying to enlighten the public on the matter and encourage it to voice concern with elected officials that the issues must be addressed.
Constituent influence, short of a financial disaster, is just about the only way elected officials in a democratic republic like the U.S. will take on such a hot-button issue that involves cutting spending on many programs, revamping entitlement programs (Social Security, Medicare and Medicaid) and raising taxes on large swaths of the American people.
To do less only leaves the demon of fiscal collapse lurking in the (not-so-distant) future.
Finally, after over a decade of ignoring the problem…largely thanks to the U.S. Federal Reserve Bank keeping interest rates at historically low levels…elected officials are slowly acknowledging the demon and are at least talking about how to address it.
Fiscal Commissions
Both U.S. House and Senate members have put for legislation that would establish fiscal commissions to discuss the issues and put forth recommendations to address them.
Huh. Sounds familiar, doesn’t it? Maybe like the Simpson-Bowles Commission of 2010?
But at least there’s talk of talking about America’s fiscal problems.
Significant issues move slowly in our governing bodies. Especially when the results could mean the loss of votes.
Anyway, the House has put forth the Bipartisan Fiscal Forum. You can read a brief overview and see the members who are part of the Forum at this Bipartisan Fiscal Forum link.
The Senate has introduced the Fiscal Stability Act which would establish a similar fiscal commission.
It’s likely, the thought process goes, that the similar efforts would merge with a bipartisan House and Senate commission working together to put forth sound fiscal proposals to get America back on the right track.
But, like I said before, Simpson-Bowles.
The primary difference between then and now, though, is that America’s interest rates have risen significantly. These increased rates require the U.S. to pay substantially more than it used to in interest payments when issuing new Treasury bonds, notes and bills to fund America’s spending.
The image below, courtesy of the Peter G. Peterson Foundation, shows current and future interest costs in relation to other areas of the federal budget.
In 2023, the U.S. is paying over $600 billion a year in interest alone. And without a significant drop in interest rates, that amount will only increase.
The result will be the reduction of spending on other areas of the federal budget just to pay the required interest payments.
The U.S. is in a fiscal mess that needs to be addressed in the near future.
It’s a good first step to, again, establish fiscal commissions to study the problem and put forth solutions.
Those solutions aren’t rocket science, though. What needs to be done is already known.
It’ll just take political will and backbone…which, I’m unfortunately not convinced our elected officials can muster in today’s political environment.
Don’t want things to devolve into a financial disaster? Tell your U.S. elected officials to fix America’s fiscal problems now. Or you’ll vote them out of office. Your voice may be the only bulwark to things getting really bad.