New York Times: "Is the Deficit Urgent, or a Distraction?"

Aug 30, 2012 | Budgets & Projections

The New York Times' "Room for Debate" this week takes on our federal debt with a forum entitled "Is the Deficit Urgent, or a Distraction?" Writing in favor of the "urgent" side, naturally, were CRFB president Maya MacGuineas and Fiscal Commission co-chair and Fix the Debt co-founder Erskine Bowles. 

According to MacGuineas, going over the fiscal cliff is too damaging but eliminating the cliff policies without a plan to bring down the debt in the long run could scare crediters.   

The upcoming fiscal cliff will soon cause the moment of reckoning. If we hurdle ourselves off the cliff, doing too much deficit reduction, too fast, and in the wrong ways, we will plunge the nation back into recession; whereas if we punt, we will surely endure further downgrades and quite possibly frighten credit markets into no longer favoring the U.S.

Instead, we must be willing to use this moment as the first step of putting in place a comprehensive debt deal. We will have to be willing to reform all parts of the budget — including health care, Social Security, defense and taxes. Doing so would not only be good policy, but good politics. Already, more than 140,000 Americans have signed a petition called Fix the Debt, asking our leaders to pass a comprehensive debt plan.

Bowles agreed with our motto that any plan to reduce the debt should "Go Big, Go Long, and Go Smart." A comprehensive plan would not only be better than fiscal cliff, it would perserve the country's ability to make the investments it needs well into the future:

The only responsible course of action is to replace the fiscal cliff with a gradual and thoughtful plan to save at least $4 trillion over the next decade and put the deficit on a clear downward path relative to the economy.

Such a plan can lay the foundation for sustained economic growth through a combination of debt reduction, comprehensive tax reform, and maintenance of important investments in education, infrastructure, and high-value research and development.

The potential benefits of a plan similiar to the framework of Simpson-Bowles or Domenici-Rivlin are apparent, but leaders are going to have to reach across the aisle and make tough political choices. It is still very possible to solve this problem, we just need to choose to make these decisions now instead of waiting for a crisis. According to MacGuineas, both sides need to make compromise a priority:

Any plan will have to be bipartisan, because quite frankly this will be just too hard for either party to do alone. And if we let the presidential election deteriorate into political posturing, we will make the job of passing the needed reforms even harder. It’s not enough for the candidates to accuse each other of touching the budget’s sacred cows; they must present their realistic plans to fix the debt — plans in which those sacred cows will have to be touched.

Changes will have to be made. We can do it on our own terms, or we can wait until we are hit with a crisis and are forced to — as we have seen in Greece and Portugal. Let’s hope our leaders are willing to come together to fix the debt while we still have time.

Read the entire debate here.