In the Nation's Interest

U.S. Debt Crisis Needs Large Table, Locked Room

The national campaign against the burgeoning federal debt lacks leadership. Not the kind of leader who rides in on a white horse, brandishing the perfect plan. There’s another kind of leader who’s gone missing.

Lots of plans purport to reduce the debt. But every plan is different, every one protects the constituency of the would-be hero presenting it, and so no plan has majority support. If everyone waits for the perfect plan, the problem won’t get solved. It will get a lot worse.

There’s only one way to solve the fix we’re in: The president and Congress -- leaders of both parties -- must acknowledge the danger that confronts the nation and walk into a closed room. They must leave their ambitions for political victory at the door and negotiate until they pound out an agreement.

That agreement is ugly and by no means a perfect plan. Nobody likes every piece. Everyone’s ox is gored. But the grownups know they must split the difference and move on.

Why no perfect plan? The budget problem is huge, and congressional interests are extraordinarily diverse. Many members reflexively proclaim that the problem is spending. But whose spending? Whose highways and transit funding? Whose airport, waterway and port subsidies? Whose agriculture programs? Whose military bases? Whose parks?

Pointing Fingers

So those who point fingers only at spending growth quickly retreat to unspecified, across-the-board cuts. The House Republican Study Committee proposed $2.5 trillion in spending cuts over 10 years. Two problems: First, that is less than half what is needed to cap the nation’s debt at the still- unacceptable rate of 60 percent of gross domestic product, its level at the end of 2010.

Second, 80 percent of those spending reductions are unspecified. When you specify all those cuts, your allies jump off. Getting enough back on board requires a mass negotiation.
That is why no one person’s plan ever becomes law. We have a committee system. A House committee alters the plan, after which the full House may change it further; then a Senate committee and the full Senate changes it some more. Finally a conference of the two chambers works its will still further.

Pleasing the Base

Some argue that President Barack Obama, in his State of the Union address, should have been the hero with his own commission’s plan. If he had presented that plan, with its proposed cuts in Social Security and Medicare, his political base on the left would have eaten him alive, and Republicans would simply attack and wait.

If Obama had put forward a Democratic plan, with large tax increases on upper-income Americans, the Republican House would oppose it, and the result would be stalemate.

Sadly, every affected interest group will attack any hero’s best ideas. After a few attacks hit their mark, the perfect plan is full of holes, leaving fewer good ideas for serious discussions later.

A leader should skip the plan and go straight to the messy bipartisan negotiation. It worked throughout the Reagan years, in 1990 under George H.W. Bush and again in 1997 under Bill Clinton.

Obama could have been a hero by calling both chambers and both parties to join him in an emergency negotiation. Congressional Republicans could not refuse. Instead, Obama’s address made the growing debt just one more item on a to-do list, the rest of which would make the budget deficit worse.

Serious Negotiation

There is one more chance. The president could call on leaders in Congress to join a negotiation at the release of his budget on Monday. A serious negotiation could head off a political crisis over the debt limit in April or May, or the expiration of the continuing resolution for appropriations on March 4.

If the president keeps his current course with an alarming budget and no call to negotiate, he will only please a base that is not large enough to prevail. Congressional Republicans will reveal no ultimate budget plan because they cannot solve the problem their way either. They will propose the sharpest cuts they can manage in domestic appropriations, interrupting the president’s agenda but falling far short of solving the problem.

That leads us into the 2012 presidential campaign, when each candidate will curry favor by promising to fix the budget without pain: no tax increases, no cuts in Social Security or Medicare or any other visible program. Such commitments will prevent any meaningful action against what will, by then, be an even worse debt problem.

Four more years of this? Imagine how the financial markets will react.

We must head off that crisis. We need a hero to ride in -- not with a white horse, just a negotiating table.



(Joseph J. Minarik is senior vice president and director of research for the Committee for Economic Development, a business- led think tank in Washington. He was chief economist for the Office of Management and Budget under President Bill Clinton from 1993-2000. The opinions expressed are his own.)

To contact the writer of this column email joe.minarik@ced.org. To contact the editor responsible for this story email Mike Riley at mriley@bloomberg.net. Commentaries are the views of the authors and do not necessarily represent policies of the Committee for Economic Development.

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