Fix the debt to protect the middle class
Source: Post and Courier
March 25, 2015
In Washington, Republicans and Democrats are fighting to convince American citizens they are champions of the middle class.
Yet both parties shy away from the issue that most impacts the middle class: the national debt.
Talking about the debt requires honest, substantive discussions about issues that matter to the American people. The core drivers of our debt are entitlement spending and our aging population. The demographic changes threaten time-tested programs that the middle class has come to rely on — namely, Medicare and Social Security. These programs are also threatened by leaders of both parties failing to address the fiscal issues now when changes can be modest. If we wait, change will have to be drastic to fend off insolvency.
In recent years, Social Security has started running deficits, paying out more money than it takes in.
As a result, the Social Security trustees warn that the system will reach insolvency in 2033. Without meaningful reforms, beneficiaries will see a whopping 30 percent cut in annual benefits. To middle-class families who rely on these benefits, that’s a catastrophic hit to their incomes.
For Medicare, solvency lasts only until 2030 — at which time our seniors will feel a 15 percent cut in health insurance benefits. The costs of these programs are continuing to rise, and a shrinking workforce is unable to pay for these hard-earned benefits.
Despite annual budget deficits falling in recent years, new estimates have us returning to $1 trillion deficits in the next decade as a growing national debt decreases middle-class wages and crowds out investment in public and private ventures. It’s time to come together to ensure the future of our existing programs that serve as a vital lifeline for retirees.
But Washington has little appetite to confront even small, difficult choices, let alone the large ones.
The debt requires compromise, something in short supply these days, since everyone will have to surrender some ground.
At 74 percent of Gross Domestic Product (GDP), debt is currently the highest it has ever been as a share of the economy in this nation’s history, other than around World War II. This is more than double the size of our national debt back in 2007 before we entered the economic crisis. This suggests that we should take up this issue.
And this goes to the heart of the problem. There are plenty of political reasons for ignoring the debt but no economic ones. We need to restart the conversation on fixing the debt. The next generation of middle-class Americans will thank us.
Jim Hodges, a Democrat, was governor of South Carolina from 1999 to 2003 and is a member of the Campaign to Fix the Debt Governors Fiscal Leadership Council.