A recent panel discussion in Washington underscored the fiscal and economic challenges facing the country but also pointed towards possible solutions and ways to protect the country now and in the future.
There was considerable agreement among the panelists that Washington’s fundamental budget problems were clear and could — with sufficient political will and public engagement — still be fixed.
”We know exactly how to do it,” said Michael A. Peterson, chairman and CEO of the Peter G. Peterson Foundation. “And we’re in total control of our budget. We don’t need other countries to cooperate, we don’t need to convince other people around the world.”
Jeff Fox, chairman and CEO of St. Louis-based Harbour Group, emphasized the need for fiscally responsible policies that would encourage workforce expansion, rein in health care costs and foster economic growth.
Other panel members were Alice M. Rivlin, a senior fellow at Brookings and former vice chair of the Federal Reserve Board, and former Senator John C. Danforth, a co-chairman of The Concord Coalition. Robert L. Bixby, Concord’s executive director, served as moderator.
The program was presented by Concord Wednesday night as part of its annual Economic Patriots Dinner.
Peterson pointed to the federal government’s rising interest payments as particularly persuasive evidence of the folly of current fiscal policies.
“I think three years from now we’ll spend more on interest than we do on our kids,” he said. In five years interest will exceed defense spending, he added, and in 10 years interest payments will be the third largest expenditure of the federal government.
“It doesn’t mean the United States is going to crumble tomorrow,” Peterson said, “but does this make any sense to anybody? . . . The interest costs over the next 10 years are $7 trillion. So if we didn’t have any debt, can you imagine what we could do with those funds that would actually be investments in our future as opposed to investments in our past?”
Bixby noted that when the new Congress starts working on the budget for Fiscal 2020, it will be facing a projected deficit for that year of $1 trillion — despite the strong economy and without a major war. “That’s just astounding,” he said.
Rivlin said she thought many people have chosen to ignore such large federal deficits in part because experts have previously warned that “the sky is falling” yet “it hasn’t actually fallen yet.” She added: “That doesn’t mean it won’t,” but more public education about the risks of high government borrowing is needed.
Much of the panel discussion focused on health care, which Bixby called “the single biggest programmatic challenge of the federal budget.”
Danforth said he thought health care reforms held particular promise if they could move away from the “fee-for-service” approach in which providers are paid based on the level of services rendered rather than overall treatment results.
Fee-for-service can often result in questionable treatments. Danforth offered a personal example, saying he had received frequent dermatology treatments — paid for by Medicare — until he started to doubt their necessity.
Rivlin, however, cautioned against assuming that the problem of health care costs is easy to fix. “It’s not,” she said, “or it would have been fixed.“
She said a “pay-for-performance” system requires the measurement of performance and “We’re not very good at that.” Many people are working on the difficult task of designing different incentives in health care, she said, but added: “It’s not easy.”
Another topic of discussion was the need for a larger work force as the population ages and Washington struggles to pay Social Security and Medicare benefits to more retirees.
Encouraging a higher birth rate is one option but as Fox noted, “That’s going to take a long time.” He said he thought immigration was “the best, easiest way” to expand the U.S. workforce.
He added, however, that the country should focus “not on just any immigration” but on prospective immigrants “who are going to make a difference to our country in growth.”
Bixby drew the discussion to a close on an encouraging note, saying “there’s nothing inevitable about a crisis.” He said advocates of reform must keep working towards “a sustainable fiscal future that’s going to lead to the sort of economic growth that you are going to need to preserve the American dream for future generations.”
Also on Wednesday night, Concord honored Fox with its 2018 Paul E. Tsongas Economic Patriot Award.
The annual award honors individuals who have demonstrated a commitment to fiscal responsibility. Over the years the award has been given to individuals of varied backgrounds and political affiliations.
In announcing this year’s award, Concord said: “Now, more than ever, we need citizen leaders to rally to the fight for fiscal responsibility, economic growth and a better future for ourselves and coming generations. Jeff Fox exemplifies such leadership. He recognizes that in government, as in business, lasting improvements do not occur overnight but require the consistent execution of a long-term, strategic vision.”