Europe is in shambles, Portuguese debt was downgraded to junk status and a couple of politicians in Congress did not have the courage to do a task they volunteered for. This is politics as we have come to know it.
During the budget battles earlier in the year, democrats and republicans agreed on forming a “super committee” made up of an equal number of members from both parties and both houses of Congress. Its task was simple – find a way to reduce our burgeoning debt by any means possible. Taxes and cuts to social services, defense and entitlement programs were all on the table.
The package, if it made it out of committee, was guaranteed an up or down vote in Congress without stalling and without amendments. If it did not pass, defense and entitlement programs, the golden geese of both parties, would be cut instead.
These were the stakes. Needless to say, Congress failed miserably.
Nothing was voted on and the public did not even hear the basics of what a package would entail. A plan never seemed to even get off the ground in the super committee.
This is how a major crisis starts, and a major crisis is indeed what the United States is facing.
Anyone paying attention to the stock market or just turning on the news for half an hour every night has heard about Europe and the problems those debtors are causing domestically and abroad. As bad as it seems, imagine the issues if the United States became like those countries in Europe. At the current rate of spending, the nonpartisan Congressional Budget Office believes we will, in about 15 years, have the same debt-to-GDP ratio of European nations on the brink of default.
It can, and likely will, happen within our lifetimes. This situation will put the Great Depression to shame and has the potential to wreak worldwide economic havoc the likes of which has never happened.
This is not to say we cannot stop it. The same CBO analysis has another scenario where the United States restrains but does not cut spending, lets tax cuts expire and other taxes expand. This baseline scenario would see debt-to-GDP rise to 84 percent by 2035. This is still unacceptably high, but workable.
It is vital to understand what we as a nation face. The sooner the United States cuts down on debt, the better off we will be. With more time, the U.S. can reduce the deficit little by little and simply grow out of it with increases in revenue.
It can be done, but not with the current leadership in Washington, D.C. Congress and the president have proven time and time again that they lack the courage to do what is necessary. No matter how painful it may be to cut spending, that is what must be done.
Fortunately, spending has been cut due to the failure by the super committee to reach a deal. While it is clear the do-nothing president is posturing against the do-nothing Congress, Barack Obama has guaranteed a veto of any bill seeking to prevent scheduled cuts due to the committee failure. He hopes that Congressional failure will bolster his election chances and those of Democrats in 2012.
If Obama truly wants to help, he should offer a concession. Congress can still salvage its precious programs but must do so on a dollar-for-dollar basis. Each dollar for a program must be paid for by a dollar in a spending cut or revenue hike.
This program might just work because Congress is extremely fearful of constituent fallout. The reason most austerity measures are prevented involves the retaliation that would take place by the people on the local politician that raised taxes or cut entitlements even though that may indeed be the right thing to do.
We can still fix this. Every day of the remaining term for Congress should be focused on the debt. Americans must be ready to suffer cuts and even implore Congress to force them upon us. Without the small cuts now, the pain later will be too much for our system to bear.