I’ve argued long and hard that the debate over the debt ceiling specifically is meaningless. The real issue that faces us as a country is our spending. Government spending is at the root of this issue. For generations, the nation has made promises and committments that, in combination with changing demographics and the economic growth (GDP) of the country, have become unsustainable in the long term. We can go around in circles on who caused it (hint: the answer isn’t only Bush), the merits of various attempts to mitigate it (QE1, QE2, Stimulus, TARP, Cash for Clunkers, etc.), or how bad we’re going to let it become. But in the end, it is simply a spending problem. The former Comptroller General of the United States, David Walker, puts it as follows:
“Here’s the bottom line. If you take the total liabilities of the United States – public debt, unfunded pensions, retiree health care, under funding with regard to social security, with regard to medicare, a range of commitments and contingencies – as of September 30, 2010 we would have had to have had $61.6 trillion dollars in the bank in order to be able to defease those obligations.”
“The fact of the matter is that government has grown too big, promised too much and waited too long to restructure. Our problem is overwhelmingly a spending problem.”
“Lets understand something very simple. If you have escalating deficits and mounting debt, that means you have to increase the debt ceiling limit at some point and it means absent structural reforms in entitlement programs, defense and other spending, those represent deferred tax increases.”
Deferred tax increases will continue until we get those structural reforms. So when you hear your liberal friends – or President Obama – say that tax increases (on the “wealthy”) are required to solve our economic woes, they are true with the premise that they don’t want to make sufficient structural reforms to the entitlement programs. Get over it. The response has two parts: (1) fair does not equal equality – see ‘Puter’s excellent post for details…seriously, ‘Puter’s always right and (2) no, tax increases aren’t required if structural reforms are made to what ails us. It’s time to attack the cause and not the symptom and yes, it’s going to be painful – politically, economically and socially.
Mr. Walker goes on in his interview on CNBC to say:
“We are not exempt from a debt crisis. We’re never going to default, because we can print money. At the same point in time, we have serious interest rate risk, we have serious currency risk, we have serious inflation risk over time. If it happens, it will be sudden and it will be very painful.”
Regarding fixing the problem long term , Walker urged, “let me give you the bumper sticker, it’s ‘Limited government, individual liberty, fiscal responsibility’”.