National debt should be focus of new Congress

National Debt Clock

National Debt clock in New York City

National Debt Clock
National Debt clock in New York City

The 2010 midterm elections may have delivered a stinging blow to the Obama administration, but the onus is now on Republicans to deliver on their promises to reduce government spending and reform the way government does business.  The national debt is skyrocketing ever higher, and Republicans are fighting within their own ranks to propose ideas to cut the budget deficit.  In their draft proposal released on November 10, the co-chairs of the National Commission on Fiscal Responsibility and Reform, Alan Simpson and Erskine Bowles, wrote that reducing the national debt will be “painful” and “everything must be on the table.”  Politicians in Washington, and American citizens from all walks of life, should recognize this painful reality.  The national debt rose due to irresponsibility from both major political parties, and neither should blame the other for the rising deficit.  Furthermore, American citizens should recognize that many of the government programs they depend on the most, like Social Security and even some welfare programs, will need to be cut in some form.  Higher taxes, too, may be necessary, but Americans should understand that by paying higher taxes now, future generations will be saved from having to pay higher taxes and experience greater cuts in government services in the future.  It is critical that the national debt be cut now rather than for Americans to push it off for future generations, especially as China’s top credit rating agency downgrades the USA’s credit rating amid fears that the US will be unable to pay back its foreign investors.

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An important step that can be taken immediately to show Americans that Congress is concerned about out of control spending is to cut earmarks.  Earmarks, which are legislative provisions that direct government funds to spent on specific projects, should be dramatically curtailed or even banned outright.  Earmarks are representative of the broken culture on Capitol Hill, as legislators typically sneak earmarks into unrelated bills to direct taxpayer funding to a particular organization or project in his or her home state or district for political gain.  Earmarks are ripe for abuse, as a number of politicians have been accused of using earmarks to benefit lobbyists or organizations who contribute to their political campaigns, and many earmarks, like the notorious Bridge to Nowhere in Alaska, have been derided for being wasteful.  Citizens Against Government Waste, a private, non-partisan, non-profit organization, calls earmarks a “form of corruption”, and rightly points out that “serving the particular needs and wants of states and communities is not a core responsibility of the federal government.”  A report released by CAGW earlier this year reported that taxpayers paid $16.5 billion for earmarks in 2010.  While this amount is very low compared to the total cost of the federal budget, eliminating earmarks would send a powerful symbol directly from Congress that spending needs to be cut throughout government, and cutting earmarks are a step in the right direction.

President Obama promised during his nomination acceptance speech at the 2008 Democratic National Convention that he would look through the federal budget line by line to cut the national debt.  But he seems to have forgotten this bold promise when he outlined his FY 2011 budget earlier this year.  In it, Obama proposed a 1.4% pay raise for civilian federal employees and military employees.  While the pay raises for employees were lower than in previous years, the country simply can not afford those raises.  The Fiscal Commission estimates that freezing federal civilian pay and bonuses outside of the Defense Department for three years would save approximately $15.1 billion, while freezing salaries and bonuses within the Defense Department for three years would save $5.3 billion.  Salaries in the federal government already continue to outpace salaries in the private sector.  According to the Congressional Research Service, Federal Civil Service pay has increased by 40.6% since 2000, yet during that same time period, average wages in America only increased by 34%.  Furthermore, USA Today reported recently that the wages of federal employees exceed wages in the private sector in 83% of comparable occupations.  The CATO Institute, using information from the US Bureau of Economic Analysis also compared wages and benefits for federal civilian employees with those in the private sector, and found that federal civilian employees received on average $60,000 more in pay benefits than the average private sector employee in 2008.  In addition, millions of Americans are out of work or are experiencing pay freezes or even cuts in the private sector right now, and it is irresponsible for government workers to continue to collect pay raises while their private sector counterparts suffer.

While freezing federal salaries is a key step to reducing the national budget deficit, the Defense Department, which has long been fiercely protected by Republicans unwilling to cut defense spending, must shoulder some cuts.  The Fiscal Commission’s draft proposals call for $100 billion in cuts in the Defense Department, including nearly $28 billion proposed by Defense Secretary Robert Gates himself.  The Fiscal Commission has also preliminarily proposed reducing overseas bases by a third, totaling $8.5 billion in savings, and modernizing the Defense Department’s health care program, Tricare to save $6 billion.  Even integrating children of military personnel into local schools in the United States would cut over $1 billion from the federal budget.  Many Congressman, including a number of Republicans, represent districts that rely heavily on defense-related jobs, and are unwilling to consider cutting defense spending.  Furthermore, many Republicans want defense spending to be off-limits to cuts, for fear that it will reduce the country’s ability to respond to foreign threats.  Congress should understand that cutting the Defense Department does not represent a threat to national security, and that the Defense Department has waste and inefficiencies just like nearly every other government department.  Defense spending has nearly doubled since 2002, thanks in part to two extremely costly wars.  Cuts must be made in the country’s defense budget in order to bring the national debt under control.

Although politicians are not likely to entertain proposals to raise taxes to cut the national debt, there are reasonable ways to raise taxes so that all Americans can share in the sacrifice to pay for the country’s budget woes.  For example, members of the Fiscal Commission have suggested raising the gas tax gradually by 15 cents beginning in 2013, to help pay for transportation costs in the country.  Raising the gas tax may be unpopular, especially for businesses who conduct a lot of work via transport, but the nation’s roads and infrastructure are rapidly falling into disrepair.  As such, raising the gas tax will allow every American who uses the road to share in paying for maintaining the roads that they use regularly.  Furthermore, CNN has pointed out that while the 15 cent increase may seem dramatic, gas prices typically fluctuate by that amount, or more, during short time periods.  The average price of gasoline, according to CNN, has actually gone up by 20 cents between October 1, 2010 and November 11, 2010.  Those numbers indicate that many motorists across the United States will pay the higher gas tax anyway, because gas prices go up significantly anyway on a regular basis.  Some may not even notice the higher tax.

While many Americans are up in arms over proposed cuts to Social Security, the harsh reality is that the current Social Security system remains unsustainable and major reforms are needed.  In France, the retirement age to collect social security benefits was raised to 62, which caused mass protests throughout the country and shows the difficulty politicians in Washington will have in convincing Americans to accept increases to the Social Security retirement age here in America.  Essentially, France made a smart decision in raising the retirement age, and the US should follow suit.  The average human life span continues to grow longer, and retirement ages need to be modernized to reflect the longer life expectancies.  The Fiscal Commission has proposed increasing the retirement age to 68 by 2050 and to 69 in 2075.  The Commission also suggests reducing cost-of-living increases and making overall reductions in Social Security benefits.  The Fiscal Commission is also proposing that the Social Security Administration “develop an education campaign to encourage greater personal savings, delayed retirement, and phased retirement,” which would help reduce the need for Social Security benefits.  For far too long, politicians have tried to ignore the growing problems the Social Security program is having financially.  Congress is unwilling to raise the retirement age for fear of anger from seniors who depend on those programs, but Congress should look to their French counterparts for proof that it is possible for politicians to survive politically even after raising the retirement age.  Groups like AARP are already coming out against plans to cut benefits, and even outgoing House Speaker Nancy Pelosi has called the Debt Commission’s proposals “simply unacceptable.”  However, Pelosi’s statement is ignorant of the problems that Social Security is facing in the long-term.  Social Security needs reform, and tough decisions must be made in order to make sure that the program is put on sound financial footing.

Ultimately, the Fiscal Commission’s early suggestions are reasonable and Congress should consider all proposals, even the ones that will be hardest for Americans to swallow.  The national debt has risen to unsustainable levels under the oversight of both Republicans and Democrats, and rather than blaming each other, both parties must now work to come up with tangible solutions to cut the deficit.  Refusing to entertain tax increases or retirement age increases is irresponsible and only show that politicians in Washington are unwilling to make potentially politically-fatal decisions.  Washington politicians should not be afraid to put their own reputations on the line, and risk losing their seats in Congress, for the sake of reducing the national budget deficit and bringing it back to manageable levels.