This week on Facing the Future, we hear a bipartisan plea for action to address America’s long-term debt problem from two veterans of many Congressional budget fights. Those two with their fair share of battle scars are: Tom Kahn, a professor of federal budget policy at American University who served as Democratic staff director for the House Budget Committee for nearly 20 years; and Bill Hoagland, Senior Vice President of the Bipartisan Policy Center, who was a longtime Republican staff director for the Senate Budget Committee.
Kahn and Hoagland recently penned an op-ed together for Newsweek in which they argued that both parties in Congress must work together to seriously address America’s growing and long-term debt problem, and make politically painful compromises, because neither can do it alone. Concord Coalition policy director Tori Gorman and chief economist Steve Robinson joined me for the conversation.
Both Kahn and Hoagland say there is a reason they came out with their bipartisan plea for action now, and it’s not only because of the increasing severity of the debt problem. Kahn reminds us that – as we saw in the recent agreement to suspend the debt ceiling until 2025 – we are in a rare moment of divided government between Democrats and Republicans, and that can actually lead to some real compromise that moves the needle on addressing long-term fiscal sustainability.
“I have my scars – of which I’m very proud – from Simpson/Bowles, the super committee, and the Biden budget negotiation, and sadly all of them failed, for fundamentally the same reason, which is: the only way to reduce the deficit is to cut spending and raise taxes,” said Kahn. “I’ve never heard of a politician who has run successfully on a campaign of ‘I’m going to cut your benefits and raise your taxes, please vote for me.’ Those are usually losing lines rather than winning lines. But I do think that divided government actually creates better conditions because these are tough choices. These are painful choices, frankly, and they’re trade-offs. Having political cover so that you have both parties vested in it makes a big difference.”
“A lack of leadership on this issue has been paramount over the last few years,” said Hoagland. “If we’re going to confront this long-term, let’s be honest. These are difficult issues – Social Security, Medicare, taxes. What I fear more than anything else is, if you cannot convince the American public that there should be some changes in those programs that impact them directly, they’re not going to feed that into their elected official to move forward, and the elected official is not going to push them. As a consequence, nothing happens, and we end up in a crisis situation. It’s critical here at the top level to convince the American public this is an issue that should be addressed, and unfortunately you’re not going to like it, there are sacrifices that have to be made on both sides, but if you’re concerned with the future of this country, your children, your grandchildren, you’ve got to be focusing on this long-term.”
The two shared some principles and approaches to reduce the biggest drivers of our deficits and national debt – the social safety net programs of Social Security and Medicare – critical for millions of seniors and disabled Americans. In addition to that, they say there are savings to be had in the annual defense budget, which in his latest budget proposal President Biden asked for $886 billion for the coming fiscal year.
“We want to maintain our security forces as best we can, in this geopolitical situation we find ourselves in today, particularly with Russia and Ukraine, and China and Taiwan,” said Hoagland. “But, that five sided building across the river has a bureaucracy that needs to be reformed, particularly as it relates to the procurement of military equipment. We have five, six major contractors. We don’t have the competition there that we used to have many years ago. Second of all, we can be looking at some of the issues surrounding personnel. We talk about Medicare, but the military also has Tricare health care that provides generous benefits. I’ll give Tom credit for this, we’ve moved into a new technology world in war fighting. We don’t have to pay drones military retirement or medical benefits. We should be looking at ways that with the technology that’s out there, we can reduce the amount of exposure to our fighting forces, but also to our budget by readjusting our expenditures in those areas of technology that will benefit our national security going forward.”
When it comes to revenue, Kahn says both political parties need to prepare themselves for some sober conversations with their constituents and voters.
“Americans are willing to pay their fare share, as long as it’s equitable,” said Kahn. “Unfortunately, we have seen in the last 20 years a gross, disproportionate gap between the middle class and the people at the top. There’s plenty of opportunity in terms of raising taxes on the wealthy. But it can’t stop there. There’s some general understanding that we can’t tax people who earn less than $400,000 per year. Look, if we are going to keep the promises that we made to seniors and to others, particular to seniors on Medicare and Social Security, we just have to find a way to pay for it. That means people will have to pay higher taxes. That means income tax, a VAT – national sales tax, there are other forms of tax. Nobody likes to pay high taxes, especially if they don’t think that others are paying what they should.”
Revenue was one of the few areas where these longtime friends from two different ideological backgrounds actually had some policy disagreements. Agreeing that the federal government needs more revenue, Hoagland says instead of focusing on increasing tax rates on the wealthy or others, we should start by eliminating exemptions from the current tax code. Many economists estimate closing those precious carve-outs and loopholes would raise trillions of dollars in currently uncollected revenue over the long-term.
This was a fascinating show that provided some hope for what could be possible, if enough members of Congress thought or behaved like Tom Kahn and Bill Hoagland. That is to say, if they focused a little more on what’s in America’s long-term fiscal and economic interests, and a little less on who might be their next primary opponent.
Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.