National Debt--6 Ways to Get America Back on Track
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By Kirk Victor,
The Fiscal Times
May 26, 2011

When it comes to trying to fix the nation’s long term debt problems, there are vast differences over how best to proceed: Just how large should government be? What services should be provided by the government and which should be delegated to the private sector? How much should the government be collecting in taxes to pay for social services? And how deeply should the government cut to help bring the $1.5 trillion annual budget deficit under control?

The answers vary greatly across the political and philosophical landscape. As representatives of six groups that span the ideological spectrum offered prescriptions for dealing with the debt Wednesday at a fiscal summit , Stuart Butler of the conservative Heritage Foundation pointed to one area of agreement in their competing proposals: the importance of preserving a safety net for vulnerable citizens.“There can be agreement,” Butler said, “that it's very important to make sure that there is real security for people who are poor and for people who suddenly come into some problem.”

Interviews with representatives of the six groups, whose work on this project was underwritten by grants from the Peter G. Peterson Foundation  , reveal that though their philosophical differences about the government’s role are great, they all agree that current fiscal policy is not sustainable. The groups, from left to right, include: the Roosevelt Institute Campus Network; the Economic Policy Institute  (EPI); the Center for American Progress ; the Bipartisan Policy Center ; the American Enterprise Institute (AEI) and the Heritage Foundation “Everyone is in agreement that in the long run deficits have to be below the more pessimistic projections,” Michael Ettlinger, vice president for economic policy at the progressive Center for American Progress, said in an interview.

And the groups also share a greater appreciation for the difficulties that legislators and the White House confront in trying to reach agreement on a plan to bring down the spiraling national debt. A bipartisan group of six House and Senate members, led by Vice President Joseph Biden, planned to meet again this afternoon in search of a compromise to cut more than $1 trillion in spending and raise the $14.3 trillion national debt ceiling before the Treasury runs out of borrowing authority Aug. 2. Another bipartisan group of senators has struggled to find consensus on a more comprehensive, long term plan for controlling the deficit.

“The difficulty of the choices was brought home to us more vividly than we had previously realized,” Alan Viard, a resident scholar at the conservative American Enterprise Institute, noted in an interview.

Still, the differences in approach among the groups are far greater than areas of agreement, Viard added. “If anybody thought that there would be some eureka moment where liberals and conservatives would just suddenly say, `Oh, here’s the way we can do it — let’s get together and do that today’ — of course, it is not going to [happen].”The foundation assignment given the groups was to develop a plan that achieves fiscal “sustainability” and budgetary and programmatic targets for achieving the goal. The plans had to be specific enough that a group headed by former Congressional Budget Office official Barry Anderson could assess them for their budgetary impact over the next 10 to 25 years.

Many economists agree that the ratio of government debt to gross domestic product (GDP) is an accurate gauge of a nation’s fiscal health. The six groups’ projected levels of federal debt to GDP varied significantly, from 30 percent for the more conservative organizations seeking deep spending cuts, to 82 percent for the most liberal groups that favor more government spending.

However, all six organizations support maintaining a social safety net for those who need it, according to a Peterson Foundation analysis. Some of the groups would make social programs more generous than others, and there are differences in the specific policies; but all preserve a role for government in maintaining health and retirement security for low-income citizens. “Further, by putting America on a fiscally sustainable path, all of the plans help to ensure that safety nets will be more secure for future generations,” the analysis stated.