Wed October 30, 2013
Another View On How To Fix The Debt
Originally published on Thu October 31, 2013 5:24 am
STEVE INSKEEP, HOST:
Now let's hear an argument to worry more about the federal deficit.
RENEE MONTAGNE, HOST:
Yesterday, former Treasury Secretary Larry Summers told us borrowing is not the nation's No. 1 problem. He'd rather invest in better roads or education.
LARRY SUMMERS: It's just as much a burden on future generations to defer maintenance as it is to pass on debt. It is just as much a burden on future generations to leave them undereducated in global competition as it is to pass on debt.
INSKEEP: Now, the fiscal policy world is not so large, and when Summers recently wrote about the deficit, he got a polite note from our next guest. Maya MacGuineas is part of Fix the Debt, a business-funded group that urges what its name says. She favors a mix of efforts to put the government on a sustainable path, from more tax revenue to long term restraints on programs like Medicare and Social Security.
She argues that would make room for the investments Summers advocates.
MAYA MACGUINEAS: Well, what there's really a case for, and this has been true for years and possibly decades, is to shift how we're spending our resources away from consumption, which is where the bulk of our federal budget spending budget goes, towards investment. We have been shortchanging investments in this country for far too long.
INSKEEP: Define consumption and investment.
MACGUINEAS: So consumption is something that you get the immediate gratification of, investment is something that will lead to growth in the economy. So if we look at how the federal budget is spending its resources, we should think a lot more about what will the return on that investment be.
The returns on infrastructure, basic research and development, education, they're very high, and yet those are very small parts of our budget. And I would go back to the problem in many ways, is that we have a huge squeeze in our budget because we've put so much money, frankly, into funding programs for the elderly instead of youth.
We have been shortchanging for quite some time the necessary investments that we should be making.
INSKEEP: You would define Social Security or Medicare and Medicaid as consumption basically.
MACGUINEAS: Yeah, they basically are consumption. Now, they're consumption that makes sense. It's really important that you put aside retirement savings and build programs that are going to insure people in their old age. But what we don't necessarily need is to be growing the benefits for people who don't depend on the programs at the expense of making investments in children.
INSKEEP: You were attacked the other day - your group was attacked the other day by Paul Krugman, the New York Times columnist, and that's a distinction. Not everybody gets to be attacked by a Nobel Prize-winning economist. The deficit-scold organization Fix The Debt is how he referred to you, but he basically said, and this is another quote, doomsayers haven't rethought their premises despite being wrong again and again.
What he is essentially saying, if I can summarize, is that people keep warning that large deficits and large debts are going to cause economic disaster. We won't be able to pay the debt. The interest rates will go up, all kinds of other problems with happen, and year after year they don't happen.
MACGUINEAS: Well, I don't actually think that's what the warnings have been. I think the warnings have been is that there are going to be huge problems at some point if we don't get on top of these fiscal challenges. And every outside organization, impartial organization, that looks at this says, you know, the Congressional Budget Office says this, the IMS says this, the Government Accountability Office says this, that we have long term problems that are unsustainable.
What we are on track right now is debt levels that are growing faster than the economy. It's impossible for that to work forever. You know you need to make changes. People who have a great platform, like a New York Times column, should use it to talk about how they would make those changes. What's really important is to get out there a lot of different ideas of how to fix the problem, not spend all your time knocking down other people's ideas.
INSKEEP: Let just remind people that now that the shutdown is over, Congress is negotiating a budget that is supposed to be a 10-year kind of blueprint for federal spending. Do you think this is a moment of opportunity?
MACGUINEAS: I think it's a small moment of small opportunity. I don't think there's a lot of political appetite for these bigger changes right now and it seems like this budget negotiation that's going on between now and the middle of December is going to focus on some smaller things, primarily can we swap out some of the sequester cuts with other forms of savings.
And I think that's a fine first start. What I do hope is that this budget conference will make some small changes and then maybe put in a process in place so that we can keep making these changes. How do we work on tax reform? How do we work on saving Social Security separate from the budget?
But we have to deal with the challenges in Social Security, make sure that system is well-financed and structurally sound. How do we control our healthcare costs? So maybe those can be the next steps if this budget conference doesn't get it all done, which I fear it probably won't.
INSKEEP: If you have Democrats talking about undoing spending cuts, and Republicans talking about maybe doing tax reform, but many of them saying it shouldn't be done in a way that actually raises more money from the government, do you actually have both parties dancing away from the deficit right now?
MACGUINEAS: Oh, you do. And we've seen this time and time again. So it gets as polarized as you can imagine in this city. Everybody, you know, says Washington's broke and I happen to think Washington is kind of broke, and then at the very last minute, when there's one of these, you know, huge kind of cliff moments and something has to be done, they cobble together a deal which actually is deficit - is bad for the deficit or is fiscally irresponsible, and they call it bipartisanship.
INSKEEP: Maya MacGuineas, thanks very much.
MACGUINEAS: Thank you.
INSKEEP: She's president of the Committee For A Responsible Federal Budget. Transcript provided by NPR, Copyright NPR.