Cook On Concord: A wake-up call for the U.S. and the presidential candidates
The “Fiscal Wake-Up Tour” — an extraordinary presentation given Sept. 28 by the Concord Coalition to members of the Greater Manchester Chamber of Commerce – offered an analysis of the fiscal problems facing the United States in the next few years.
The Concord Coalition, co-founded by former New Hampshire Sen. Warren B. Rudman, and the late Sen. Paul Tsongas, is sponsoring the tour with representatives of the Heritage Foundation, Brookings Institution and Viewpoint Learning Inc. The featured attraction was U.S. Comptroller General David M. Walker.
One column is way too short a space to explain the problems, which can be understood better by looking at the Concord Coalition Web site (concordcoalition.org).
Briefly stated, however, it goes like this: Social Security, Medicare and Medicaid currently account for 42 percent of the federal budget ($1.15 trillion) and all other federal spending is $1.6 trillion. As the population ages — and in 2047 the number of seniors will grow to approximately 20 percent of the population — the costs of those programs, if uncapped, will reach a point at which they will be eating up all available federal spending.
The spending requirements of government will take up 40 percent or so of the gross domestic product by 2040 — it takes only about 20 percent today, a percentage not matched by revenue, resulting in deficits.
Currently, we are borrowing money that is lent by foreign nations, and the amount of interest as a part of the total federal budget is nine percent. This is going to grow as the debt grows. If there is a disruption in the economy, foreign nations will not want to lend the United States money, so to attract funds, interest rates will have to go up, making the percentage of the budget go up.
We currently spend three times as much paying interest on the debt as we pay on all education costs!
We also do not raise enough money from taxes to pay for our budget. Additional revenue will have to be raised so that additional debt is not created. Read my lips: That is new taxes!
The common political answers to all of this — “finding inefficiencies” and “growing our way out of the problem” — will not work. The problem simply is too big.
By presenting the facts, in a bipartisan way and objectively, the comptroller general and his colleagues, while coming from different points on the political spectrum, want to educate the people who, they hope, will recognize the problems and the importance of solutions.
In focus groups across the country, when presented with the facts, participants have embraced solutions that politicians would doubt are viable. Among the findings are that increasing taxes across the board is an acceptable option if everyone shares in the burden in a fair way. Social Security, Medicare and Medicaid need to be reformed so they can be preserved. Reform may include putting programs on long-term budgets with caps, reining in program costs by targeting benefits to those who truly are in need, and bringing more choice and competition into Medicare and Medicaid. There may be a need to limit the Medicare drug entitlement.
All of the speakers pointed out the fact that action needs to be taken now because every year that we wait will make the problem exponentially worse.
The speakers presented all this “dismal science” to educate us to ask the right questions of candidates — questions the candidates otherwise would not hear and do not want to face when offering “candy to the babies.”
The questions are:
1. Do you support imposing strong budget controls, such as caps on annual spending, a “pay-as-you-go” rule for new spending and tax initiatives, and/or putting today’s entitlements on a firm, long-term budget?
2. What specific spending cuts, if any, do you propose and how much of the problem would they solve?
3. What specific tax increases, if any, do you propose and how much of the problem would they solve?
4. Measured as a share of the economy, Social Security will be nearly 50 percent larger by 2035. What is your vision for the future of Social Security and what strategies would you pursue to bring it about?
5. According to the 2007 trustees report, measured as a share of the economy Medicare will more than double by 2035. Much of this is driven by rising health-care costs rather than demographics. What is your vision for the nation’s health-care system, including the future of Medicare, and what strategies would you pursue to bring it about?
Cut out this column, go find a candidate and ask the questions. Your future and, more importantly, your children’s futures, depend on it.
Brad Cook is a partner in the Manchester law firm of Sheehan Phinney Bass + Green and heads its government relations and estate planning groups.