July 25, 2014

To Prevent Future Crises, Budget Experts Say, Washington Must Step Up Its Game

If the recent past is any indication of how elected officials will deal with the country’s short- and long-term fiscal challenges, Americans – and especially younger ones – are in trouble.

Washington will have to step up its game.  And ordinary Americans can help by encouraging their elected representatives to forgo political  theatrics in favor of timely budgets and more responsible policies.

That was the consensus of budget experts as well as former lawmakers who spoke at a conference Tuesday on Capitol Hill. The conference was organized by the University of New Hampshire’s Warren B. Rudman Center for Justice, Leadership and Public Policy in cooperation with The Concord Coalition and several other organizations.

With congressional negotiations on an overdue budget for Fiscal 2014 still sputtering, speakers at Tuesday’s conference considered what it would take to avoid a federal debt crisis.

They generally agreed that lawmakers in both parties as well as the President should put a greater focus on developing realistic solutions and exercising bipartisan cooperation.

“We have got to get our colleagues to lift themselves out of this political quagmire -- and forget, just for a moment, that there is an election coming next year -- and do what needs to be done for the country,” said former Senate Budget Committee Chairman Kent Conrad, the keynote speaker at the conference.

As for lawmakers who fear that responsible action could hurt their re-election prospects, he had some blunt advice: “Man up.”

Although the deficit has fallen substantially in the past year, the economic recovery has been a significant factor in that – and deficits are projected to start rising again within the next few years. Key factors: an aging population, rising health care costs and the likelihood that interest rates will at some point rise to normal levels.

“The dirty little secret is that our long-term situation has not improved dramatically,” Conrad said. He expressed confidence, however, that the nation was capable of meeting its fiscal challenges and that there was still time for this to be done through “relatively modest changes.”

In his remarks at the conference, Congressional Budget Office Director Douglas Elmendorf emphasized that a few key parts of the budget – notably the big entitlement programs -- are responsible for much of its projected growth in the years ahead.

The increases in those programs, he said, would outweigh projected cuts in other spending as well as additional expected revenue.

But he, too, found some room for optimism. He suggested that a shift in Washington’s approach to fiscal restraint could yield benefits in both the short terms and the long term.

“Policy changes that lead to less fiscal tightening in the near term but greater tightening in later years,” Elmendorf said, “would improve the economic outlook on both horizons relative to our current projections."

The conference -- “Moving Beyond the Short Term: What Will It Take to Prevent a Debt Crisis?” -- was the second such program this year for The Concord Coalition and the Rudman Center, which is part of the University of New Hampshire School of Law.

Also involved in presenting Tuesday’s conference were the university’s business school, The Center for Public Integrity, and Fix the Debt. The Peter G. Peterson Foundation sponsored the program.

John Broderick, dean of the law school, said the fiscal situation may be the single most important issue confronting the United States – and threatening future generations.

“We need to find an answer,” he said, “and we need to find it soon.”

In his opening remarks, former Rep. Mike Oxley (R-Ohio) recalled the “legacy of fiscal responsibility” that had been left by Senator Warren B. Rudman of New Hampshire, who served as one of The Concord Coalition’s founding co-chairs until his death late last year.

The conference included videos prepared by New Hampshire’s U.S. senators: Democrat Jeanne Shaheen and Republican Kelly Ayotte.

“It took members of both parties to get us $17 trillion in debt,” Ayotte said, “and it will take members of both parties to get us out of it.”

Shaheen said recent events demonstrated the need for elected officials to cooperate: “We saw what happens when we don’t work together. The government shutdown hurt families and small businesses . . . Our economy lost $24 billion, not to mention the impact on October job growth.”

The importance of bipartisanship was also underscored in the first of two panel discussions at the conference. That panel featured former Senator Evan Bayh (D-Ind.), Oxley and former Representatives David McCurdy (D-Okla.) and Jim Nussle (R-Iowa). Maya MacGuineas, president of the Committee for a Responsible Federal Budget, and Robert L. Bixby, Concord’s executive director, served as moderators.

McCurdy denounced current federal policies as “intergenerational theft,” wih Americans today leaving their bills for future generations to pay.

Bayh predicted that Washington’s current budget talks would only produce “a very small deal.” Although this would be a good time to take more comprehensive action, he said, the falling deficit had taken away some of the pressure for significant change.

Nussle emphasized the need for the nation to come together in pursuit of a common purpose. He also admonished officials for trying to take some budget items off of the negotiating table in advance.

Noting that hundreds of entities had received federal bailout money, Oxley pointed out that the private sector as well as government needed to exercise greater financial responsibility in the future.

After briefly reviewing the current state of play on the federal budget, Bixby stressed that elected officials must deal not only with short-term problems but with underlying structural deficits as well.

MacGuineas said many of the possible solutions were already known; the main problems are political. While the necessary policy changes would be manageable if done soon, she said, further delay would make them more difficult.

The second panel explored the theme of “budget-making in the modern era.” In addition to Elmendorf, this panel included Alan Rhinesmith, a fellow at the National Academy of Public Administration, and Eugene Steuerle, a fellow at the Urban Institute. The moderator was William E. Buzenberg, executive director of The Center for Public Integrity.

Steuerle said current budget policies and promises had boxed in elected officials, but he also highlighted the country’s many strengths and great economic potential: “We live in a time of opportunity.  . . .  We’ve never been so rich.”

While several speakers discussed the importance of economic growth to help deal with the government’s fiscal challenges, Steuerle cautioned that a growing economy would, for a variety of reasons, mean higher government spending.

Rhinesmith warned about hard-to-forecast liabilities and risks to which the government is exposed for everything from natural disasters to pension program failures. He said the financial crisis several years ago showed the need to be cautious about increasing government liabilities.

Margaret Rudman, widow of the late senator, also spoke briefly at the conference, recalling his concern for the next generation and praising efforts to encourage a national dialogue on the fiscal challenges facing the country.