How to fix America’s federal finances
By David M. Walker
https://thehill.com/opinion/finance/4835548-how-to-fix-americas-federal-finances/
The federal government is now at record levels of both total debt-to-GDP and mandatory spending as a percentage of the budget. It is also nearing a record for interest as a percentage of the budget. Interest expense now exceeds spending on defense and is our fastest growing expense — for which we get nothing in return.
If these facts are not troubling enough, all these figures will continue to get worse if we do not change course.
Every major federal fiscal, monetary and accountability agency has said that the federal government has been on an imprudent and unsustainable fiscal path for a number of years. We must put our federal finances in order if we want to remain the world’s leading superpower and our collective future to be better than our past.
Unfortunately, the leading presidential candidates have been silent on how they would put our finances in order and save Social Security. This is simply unacceptable.
Americans know that you cannot spend more money than you make and charge the difference to the credit card without eventually coming to a day of reckoning. No country, including the U.S., is exempt from the laws of prudent finance.
While most people focus on our more than $35 trillion in total debt, that is just the tip of the iceberg. Total federal liabilities and unfunded social insurance obligations exceed $125 trillion and are growing faster than the economy.
The truth is that our federal financial hole is so deep that we cannot grow our way out of it. Yes, we need to adopt more pro-growth policies, but tough choices regarding spending and revenues will be required to restore fiscal sanity and sustainability. At the same time, we cannot simply cut our way — or simply tax our way — out of this hole. The math and politics don’t work. To restore fiscal health, we need to consider not just what type of reforms are needed but how to achieve the needed reforms. In my view, three things are essential.
First, we need a president who will make fiscal responsibility a priority. President Bill Clinton was the last to do so. Neither major presidential candidate in 2024 currently has a credible proposal to address this critical issue.
Second, we need a fiscal responsibility amendment to the Constitution that will limit the growth of the federal government and the amount of debt the government can take on relative to GDP, absent extraordinary circumstances. The debt ceiling has failed to constrain the growth of government and federal debt. Only a constitutional amendment can bind both current and future Congresses.
A concurrent resolution sponsored by Rep. Jodey C. Arrington (R-Tex.) is designed to bring light, heat and action to this issue, and it should be passed on Constitution Day this year.