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Take one look at the fiscal disaster staring this nation in the face. The United States is now $37 trillion in debt. Multi-trillion-dollar deficits stretch as far as the eye can see. Social Security and Medicare carry more than $100 trillion in unfunded obligations. The list goes on.
“Unsustainable†does not even begin to describe it. At some point, the supply of U.S. debt will overwhelm demand and the federal government will no longer be able to borrow at reasonable interest rates. That moment will mark the ultimate financial reckoning — worse than anything this country has ever experienced. Unless bold action is taken, it is only a matter of “when,†not “if.â€
How did the nation get here? The problem is not ignorance or bad arithmetic. The problem is a deeply flawed political system that repeatedly incentivizes the wrong choices.
The Founders were part-time statesmen whose duty was to put the long-term interests of the fledgling republic ahead of personal interests. They understood that if the federal government grew too large and too powerful, it would lead to tyranny and loss of freedom. That is why the Constitution granted the federal government only limited power, leaving the rest to the states and the people.
Today, the country is governed by career politicians who see public office as a profession. Their careers depend on winning votes, and, to win votes, they promise benefits and spending that people like to receive but do not want to pay for. It is an endless cycle. Politicians give the public what it wants today, the public rewards them at the ballot box, and the bill is left for tomorrow. Rinse -- Lather -- Repeat.
Politicians are focused on the next election, not the next generation. The public often does not see the danger because the consequences are hidden in the future. What starts as millions morphs into billions, and billions morph into trillions. Before long, the obligations are so large they threaten the financial stability of the entire country. That is exactly where things stand today.
The result is a “doom loop†where debt generates high interest, which generates more debt, which generates higher interest, and the vicious circle continues until the whole house of cards crumbles.
The question is what can be done to change course before it is too late.
One clear answer is term limits. This reform would change the incentives and eliminate long-term career politicians who are always focused on the next election. With term limits, elected officials could and should focus on the long-term best interests of the country. The idea already has broad public support and growing backing in Congress.
Another step forward is the creation of a statutory bipartisan fiscal commission. Such a commission, modeled on successful efforts of the past, could put all options on the table and give Congress a roadmap for action. If structured properly, it could provide the political cover lawmakers need to take tough votes while reassuring the public that sacrifices will be shared fairly. And term limits must be part of the discussion.
For these recommendations to be effective, public support is essential. To gain it, there must be a massive, nonpartisan educational effort that presents the facts clearly and honestly. The numbers themselves will tell the story. If Americans are shown the reality of what lies ahead, most will understand that continuing the current path is not an option. There is no luxury of partisan bickering or political theater. The goal is not to fix the blame, but to fix the problem.
The problem is fixable, but only if the public understands it and demands action. Difficult steps today can prevent catastrophe tomorrow, but those steps will never be taken unless voters are prepared to support them. Politicians respond to the people. If the people are prepared for responsibility, so will their leaders be.
Other necessary reforms include devolving government, reforming entitlements and establishing fair taxation. Each deserves a thorough national discussion.
Wake up, America. Time is running out. Without reform, the nation will face the catastrophe it has chosen at the ballot box.
Les Rubin is founder and president of Main Street Economics. He wrote this InsideSources.com.
