It’s Time for Candidates to Get
Serious About Federal Finances
David M. Walker
https://dcjournal.com/its-time-for-candidates-to-get-serious-about-federal-finances/
Now that Labor Day has passed and we are in the presidential campaign season, it is time for the candidates to get serious about our nation’s substantial structural deficits and mounting debt burdens. Failure to address our nation’s finances will seriously affect economic and national security, international relations, and domestic tranquility.
So far, the major party candidates have been mainly pandering to voters to buy their votes. This includes promises by both candidates to not tax tips. One candidate has promised to not tax Social Security benefits. Another candidate has promised to increase the childcare tax credit, provide student loans and medical debt relief, provide down payment assistance for first-time home buyers, and provide a range of benefits for immigrants, including Social Security and Medicare benefits.
No matter what you think of the candidates and their policy proposals, they share one thing. They are fiscally irresponsible, and some of their proposals would accelerate the insolvency date of the Social Security Trust Fund.
We are running annual structural deficits of $2 trillion. As a result, we need policy proposals that will reduce annual deficits and mounting debt burdens rather than increase them.
Let us start with a few facts. Our federal fiscal challenge is much greater than our $35 trillion public debt. The federal government has more than $125 trillion in liabilities and unfunded obligations growing faster than the economy.
Interest costs now exceed spending on the military and Medicare and are the fastest-growing expense. Our current federal spending as a percentage of the economy is well above our post-World War II average and is headed higher.
Mandatory spending as a percentage of the federal budget is at an all-time high and headed higher. Federal taxation as a percentage of the economy is below the post-WWII average. It will increase somewhat if the so-called Trump tax cuts expire at the end of 2025. The “bottom line” is that the gap between revenues and expenses is growing based on a “do nothing” approach.
Simple math says you cannot grow out of the federal fiscal challenge. Despite assertions to the contrary, not all tax cuts and spending “investments” stimulate the economy, and few pay for themselves. As a result, tough choices will be required. We need to hear more from the candidates regarding their views on this huge challenge and how they would address it.
From a practical standpoint, candidates will be hesitant to get into much detail about specific reforms. However, they can state whether they believe our deteriorating financial position is a problem and if they would prioritize addressing it. They can also state whether they would rely more on spending cuts or tax increases to close the fiscal gap.
Finally, they can note whether they support specific approaches that can help to facilitate the needed tough choices and help achieve fiscal sanity and sustainability over time. Specifically, do they support the need for a constitutional amendment that will limit the growth of government and how much debt as a percentage of the federal economy can take on absent limited and extraordinary circumstances?
In addition, they can note whether they support the need for a statutory Fiscal Sustainability Commission that would actively engage the American people and make a package of recommendations designed to save Social Security and reduce debt as a percentage of the economy to a reasonable and sustainable level. The commission’s package of recommendations would then be guaranteed a vote in Congress.
The United States is a great nation. However, it is not exempt from the laws of prudent finance. Failure to put our federal finances in order will have serious consequences. It would also be irresponsible, unethical and immoral. It is time for our political leaders to start discharging stewardship responsibilities to our nation and to younger and future generations of Americans. The presidential and vice-presidential debate moderators and media must press the candidates on these issues. If not them, who? If not now, when?