Warning: This column contains economically graphic content. Reader discretion is advised.
Congressman David Schweikert stopped by the offices of the Arizona Chamber of Commerce & Industry on May 19 for a briefing on America’s fiscal health and the state of the federal budget.
Attendees looking for an early morning pick-me-up had come to the wrong meeting. It was a sobering discussion.
We’re a couple of days removed from a two percent drop in the stock market over investor concerns that dawdling in Washington over the debt ceiling and federal spending is taking an irreparable toll on the U.S. economy. This comes on the heels of Standard and Poor’s in April lowering its rating on U.S. debt from “stable” to “negative.” Now Moody’s is saying that it might downgrade the country’s credit rating if the government doesn’t resolve the debt ceiling issue pronto.
As the congressman’s presentation made clear, the political philosophy that “deficits don’t matter” has been locked away in a museum somewhere to gather dust.
The over-borrowing our country is engaged in to support our Social Security and Medicare entitlement programs is hard to fathom. Right now we’re borrowing 42 cents out of every dollar, and we’re borrowing $4.7 billion a day. Half of our debt is held by other countries.
How big of a chunk of our federal budget is being eaten up by entitlements? Congressman Schweikert’s presentation contained this depressing note: In just over 14 years, every penny the government touches will go to fund entitlements. The liabilities we’re foisting on future generations are profound.
Republicans and Democrats are now in a tussle over what form a vote to raise the debt ceiling will take; whether future spending cuts will touch the third rail of American politics.
But the debate over the debt ceiling is not the most important one. The real question is what the fiscal year 2012 budget will look like. The budget debate has crystallized over House Budget Committee Chairman Paul Ryan’s proposed budget, which he’s calling the Path to Prosperity, and its opponents have dubbed the Path to Poverty.
Only in Washington does the Ryan plan, which doesn’t bring the federal budget into balance for 23 years, get labeled as radical.
It takes courage for Rep. Schweikert to wade into the morass that is a debate on controlling entitlement spending. As the GOP candidate in last month’s special U.S. House election in New York found out, Republicans are selling voters stiff medicine. The congressman and his colleagues who are genuinely concerned about the economic fate of our country will be put on the defensive in the 2012 election cycle.
But those who would cast Rep. Schweikert and others’ concerns about entitlement spending as a desire to somehow dismantle Medicare and throw Grandma off a cliff would be well served to remember that Rep. Schweikert and company are attempting to actually preserve Medicare for today and future generations, as well as keep the government from going bankrupt. Without serious reform, Medicare will turn into a relic of a bygone era and we’ll be looking as economically healthy as Greece.
Beyond its debilitating affect on the overall economy, why should the business community be engaged in the issue of runaway federal spending and entitlement reform? Well, if your company does business with the federal government, you’ll be reduced to a vulture searching for carrion after Medicare and Social Security have eaten away the government flesh; there will be nothing left. And even if you don’t do business with the government, your business’ borrowing costs will go up when interest rates spike.
Despite the gloomy picture that the congressman painted for us, there are some tangible policy moves that Congress and the administration can make to help us crawl out of this mess. As articulated by Rep. Ben Quayle at the recent Arizona Manufacturers Council Manufacturer of the Year Summit, a way forward boils down to trade, taxes and regulation.
Approve pending trade deals with Colombia, Panama and South Korea. Lower corporate and individual tax rates and broaden the tax base. Lift red tape burdens on business and call off the dogs at the National Labor Relations Board who seem determined to block job creators at every turn.
When it comes to entitlement reform and controlling spending, the options in front of the American people aren’t pleasant. Tough decisions have to be made. But it’s my hope that voters in 2012 will dismiss out-of-hand any candidate who doesn’t have a legitimate solution to right our nation’s fiscal ship.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce & Industry