The Common Good
September/October 2010

More than Dollars and Cents

by David M. Walker | September/October 2010

The moral implications of our growing debt burden.

America’s increased spending, revenue shortfall, and the resulting structural deficits and mounting debt burdens are not just an economic challenge; they represent an ethical and moral challenge as well.

Consider where we stand today. In the wake of the recent recession, tax revenues have declined and spending has increased to help rejuvenate the economy and provide assistance for the unemployed. This has resulted in deficits—$1.4 trillion in fiscal 2009 alone—that are record-setting in terms of inflation-adjusted dollars, if not as a percentage of the national economy.
Despite widespread concerns, our short-term deficits and current debt levels are both understandable and manageable. However, our longer-term fiscal outlook is just the opposite. In the coming decades, federal deficits and debt burdens are set to skyrocket due primarily to existing tax policies, Medicaid, Medicare, and other programs.
The moral implications of this scenario are seldom a topic of conversation in Washington. Unless needed changes are made in the coming years, the nation may be forced to adopt dramatic increases in federal taxes and/or significant cuts to Medicare, Medicaid, Social Security, and other important social safety net programs. Relative spending levels on education innovation, basic research, and critical infrastructure would likely decline even further. As a result, our future prospects and the social fabric of the nation would likely deteriorate along with our finances.
In other words, those more in need, the young, and citizens yet unborn will likely disproportionally suffer the consequences of the imprudent actions of today. In this way, our nation’s fiscal outlook is not only unsustainable and irresponsible, it is also immoral.
We owe it to the young and future generations of Americans to change course soon, compassionately, and responsibly. Doing so will require difficult decisions and ethical considerations as we realign the federal budget to be consistent with our nation’s values.
For instance, health-care spending today accounts for 17 percent of the nation’s GDP and, if it were to continue on its current path, it would absorb a still larger swath of the U.S. economy in the decades to come. Clearly, we need to get health-care spending under control. But we must also preserve the critical social safety net programs that provide health coverage to those most in need.
Can we do both? Yes, but it will require political courage rooted in concern for both fiscal responsibility and social justice.
As an example, Medicare’s voluntary programs currently provide taxpayer-subsidized health coverage for older Americans. The wealthiest Americans get the same prescription drug benefit subsidies as those living just above the poverty line. These subsidies help to jeopardize the long-term viability of these Medicare programs.
Another example is defense spending, which is often considered sacrosanct, especially at a time of ongoing military conflicts. The U.S. government spends as much on defense annually as the next 14 countries combined, in part because we have assumed an outsized share of the global security burden. Yet there is a tremendous amount of waste in the annual Department of Defense budget, from our inefficient acquisition and contracting processes to our investments in weapons systems that are geared toward past rather than future security threats. These issues must be addressed head on.
In the final analysis, the federal budget is about more than dollars and cents. It is an expression of our nation’s core values. Today, our budget and tax code suggest that our nation values waste over thrift, greed over compassion, the present over the future. America is better than that.
If we care about social justice in America, we must also care about fiscal responsibility. Balancing our budget and addressing our impending debt crisis must begin by taking stock of our priorities and considering the consequences of our actions on the least of those among us and generations yet unborn. The time to start is now.
David M. Walker is president and CEO of the Peter G. Peterson Foundation and former comptroller general of the United States.
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