Fiscal planners discuss economy
The architects of a plan to get the country's fiscal house in order say it will take a colossal amount of courage and cooperation from members of Congress to stave off a looming financial disaster.
"We face the most predictable economic crisis in history," former White House chief of staff Erskine Bowles told a packed house at the state Culture Center Monday morning.
"Fortunately for all of us, it's also the most avoidable economic crisis in history," Bowles said.
Bowles, who served as chief of staff for President Bill Clinton, joined former Republican Sen. Alan Simpson, Rep. Shelley Moore Capito and Sen. Joe Manchin for a forum on the nation's finances.
Manchin, D-W.Va., organized the event to encourage public dialogue over the country's fiscal problems.
"What we're trying to do is prevent a train wreck," Manchin said. "We can see the light at the end of the tunnel, and I can tell you it's a big locomotive coming at us."
Capito, R-W.Va., said she came to hear Simpson and Bowles lay out their ideas for reducing the deficit and also to hear what people in the audience had to say.
"I came to listen," Capito said. "I think that's the most important thing we need to do in Washington, is to listen instead of talk so much.
"We all want to leave the country in a better place than what we found it, but if we don't take aggressive action, then I'm afraid that won't be the case," she said.
Simpson and Bowles served as co-chairmen of President Barack Obama's debt reduction commission.
While they produced a report outlining a way to cut the country's debt and deficits by $4 trillion over the next decade, it was largely ignored in Washington, D.C., because of the politically unpopular decisions it would have forced lawmakers to make.
Both men said the hyper-partisanship in Washington is to blame for making the situation so bad.
"They worship the God of re-election," Simpson said of Congress. "You know the difference between a horse race and a political race; in a horse race, the entire horse runs."
"We've got to put partisanship aside to do what's best for this country because we can't continue to have these trillion-dollar deficits," Bowles said.
"These deficits of over a trillion dollars a year are like a cancer, a cancer that's going to destroy our country from within," he said.
Their plan would use a combination of spending reductions and reforms to the federal tax code and entitlement programs to start bringing down the national debt in about a decade.
While the choices are difficult, both men say they are necessary to fix a government that's lived well beyond its means for far too long.
Bowles said the government's current revenue is enough to pay for only mandatory spending in entitlement programs like Medicare and Social Security and annual interest on the national debt - nothing else.
"That means last year, every dollar we spent on these two wars, on national defense, on homeland security, on education, infrastructure, research - every single dollar was borrowed, and half of it was borrowed from foreign countries," he said. "That is crazy; that is nuts."
In addition to revamping entitlements, the Bowles-Simpson plan would cut defense spending.
While opponents say that would weaken the nation's ability to defend itself, the two men argue that the United States currently spends more on defense than the next 15 largest world powers combined.
Much of that is not for traditional national defense.
"I personally believe America is bearing a disproportionate responsibility for world peace," Bowles said. "America has a treaty with Taiwan that we'll protect them if China invades. There's just one problem; we'll have to borrow from China to do it - it's crazy."
Simpson said defense spending has doubled over the past decade and most of the increase has gone to private contractors, not the military.
"(President Dwight) Eisenhower was absolutely right," Simpson said. "He said watch out for the military-industrial complex, they will eat up the whole system."
Because most of the revenue to be generated under the plan comes from closing tax loopholes, Bowles said it also would cut tax rates for many Americans.
He said those making under $70,000 a year could pay an 8 percent rate; those making $200,000 or less would pay 14 percent; and the top marginal rate would top out at about 23 percent.
Although some have argued that ending tax credits could hurt middle class taxpayers, Simpson and Bowles said only about 27 percent of taxpayers even itemize deductions on their tax returns. They said the impact would be minimal.
While he was unable to attend Monday's forum, Sen. Jay Rockefeller, D-W.Va., released a statement later Monday saying while he liked some ideas in the Bowles-Simpson approach, he did not agree with the large amount of cuts.
Rockefeller said 80 percent of the $4 trillion in savings the men project would come from government program cuts while only 20 percent would come from additional revenue.
"My view is that the burden needs to be shared much more equitably - at least 50-50 - because it's neither effective nor fair to cut programs that children, seniors and families build off - from education and job training to transportation, law enforcement and basic health care - unless we are also closing tax loopholes and demanding that the very wealthy go back to paying a reasonable share," Rockefeller said.
Both Simpson and Bowles acknowledged it is a struggle to get support for any type of revenue increases.
Simpson blamed Americans for Tax Reform founder and Washington lobbyist Grover Norquist for much of that. Norquist has enlisted about 95 percent of Republicans to sign a pledge against raising taxes.
Simpson said Republicans are too afraid of running afoul of Norquist to consider revenue increases.
"He can't murder you; he can't beat you," Simpson said. "The only thing he can do to you is beat you for re-election . . . if that means something more to you than being a patriot and doing something for your country, then you shouldn't be in Congress."
While neither wholly agreed with the Simpson-Bowles approach, both Capito and Manchin said they were optimistic Congress could work out a deal on something like it to reform the nation's finances.
Simpson and Bowles said they've raised $30 million for a political action committee that would provide a defense for those who stand up to support the plan. They hope Congress can begin acting on their ideas during a post-election session later this year.
Contact writer Jared Hunt at email@example.com or 304-348-5148.