The National Debt: The Biggest Threat Facing the U.S., Bar None

Bernanke Backs Efforts to Cap Federal Debt
By MERRILL GOOZNER, The Fiscal Times June 14, 2011

Federal Reserve Board chairman Ben Bernanke on Tuesday threw his considerable political weight behind a proposal for capping the still-rising national debt as a share of the economy and establishing policies that ensures it declines over the coming decades.

In a keynote address to the annual meeting of the Committee for a Responsible Federal Budget, the nation’s top monetary official called for setting “clear metrics” to bring down the deficit, which is estimated to reach $1.4 trillion this fiscal year. The long-term goal, he said, should be linked to a budget enforcement trigger mechanism that will give the plan credibility.

At the same time, he reiterated his warning that the debt ceiling “is the wrong tool” for negotiating major spending cuts and that any deficit-reduction plan should avoid large budget cuts in the short run, since that could short-circuit the fragile economic recovery.

“Policymakers could commit to enacting in the near term a clear and specific plan for stabilizing the ratio of debt to GDP [gross domestic product] within the next few years and then subsequently setting that ratio on a downward path,” he said. “To make the framework more explicit, the President and congressional leadership could agree on a definite timetable for reaching decisions about both shorter-term budget adjustments and longer-term changes.”

Bernanke didn’t offer a specific goal for reducing the total national debt as a percentage of the economy. The current national debt of $14.3 trillion is approximately 90 percent of GDP. The Committee for a Responsible Federal Budget, for instance, promotes lowering the debt-to-GDP ratio to 60 percent by 2018 on its website.
More: http://www.thefiscaltimes.com/Articles/2011/06/14/Bernanke-Backs-Efforts-to-Cap-Federal-Debt.aspx?p=1

Does our so-called "leadership" in Washington have the patriotism and intestinal fortitude to do something like this? I, like many others, fear they do not. Obama and the Democrats will be motivated in the year ahead to do anything that will get them a second term in the White House. This will include throwing money at constituencies whose votes they need.

As for the GOP, my old man --- a coal miner and bricklayer --- always said, "The Republicans are only out for themselves." This was never more true than today. Rich corporations can avoid taxes by keeping their offshore earnings safely offshore. The rich can hire the best advisers and send their money anywhere that it is safe. All they need do is keep Uncle Sam from taxing it. And it is clear they will do anything --- even gut Medicare --- to avoid paying their fair share.

So... with such motives in play, what chance is there that a non-partisan, patriotic, sensible solution will emerge? Not much, I think. But I didn't expect the Cold War to end without a hot war, or Apartheid to end without a race war, or the Irish to ever stop killing one another. Miracles sometimes do happen. Maybe one will happen in Washington in the months ahead.

My fingers are crossed... but I intend to keep on working, because I doubt there will be much in bank for me to retire on, if the miracle doesn't happen.