JOHNSTON, Iowa --- The biggest deficit facing this country as it teeters toward financial crisis is a leadership deficit, two national fiscal experts said Wednesday.
Former comptroller of the United States David Walker and Concord Coalition Executive Director Robert Bixby, who have been traveling the country warning about the dire shape of the federal government’s deficit and debt problems, said neither 2012 presidential candidate is offering a detailed plan to adequately address the nation’s long-term structural problems.
And the gridlocked Congress does not have the wherewithal to deal with the combination of spending cuts and tax increases that will be required to address with problems associated with increased demand for social insurance programs by an aging population, rising health care costs and an outdated tax system.
“The Congress is dysfunctional this year. News flash — it’s going to be dysfunctional next year. There’s nobody in charge of the Congress,” said Walker, who appeared with Bixby on Iowa Public Television’s “Iowa Press” show and later at a forum at Drake University. “…Therefore, there’s a disproportionate opportunity and obligation on the president — whoever that person is — to lead.”
Bixby said the current U.S. fiscal policy is unsustainable. He said getting the nation’s financial house in order will require charting a politically sensitive course that will include revamping major entitlement programs like Medicare, Medicaid and Social Security; cutting overall spending; controlling health care costs; and reforming taxes to raise revenue.
“We need some leadership from our leaders,” he noted. “The public is ready to make these choices if they are dealt with honestly and they have the facts. The public is willing. What is difficult to get through is the political chafe, the political fire that tends to polarize rather than bring people to consensus.”
Bixby noted that Congress and the president will be facing a “self-inflicted crisis” of sorts in January when some tax increases and spending reductions will automatically take effect — a situation that will pose an opportunity to deal with a long-term package aimed at correcting the nation’s fiscal woes over a period of years. If they fail to act this time, he said, the inaction could trigger “a very negative market reaction” from a business community gripped by economic uncertainty and increasingly alarmed by the prospect of a fiscal cliff.
Walker said he would like to see tough budget controls reimposed on the federal government, comprehensive tax reform and reform of social insurance programs, reductions in defense and other spending without compromising national security, and a “credit card limit” to replace the current debt ceiling in Washington.
“I believe the biggest deficit this country has today is a leadership deficit. I believe the people are starved for three things: truth, leadership and solutions,” Walker said.
“The people can handle the truth. They’re willing to accept tough choices and they’re willing to allow for more taxes, changes in social insurance programs and reduced spending if they’re part of a comprehensive plan that they deem to be fair,” he said.
Bixby dismissed talk of passing a balanced budget amendment to the U.S. Constitution as a plausible solution, saying it would be a “distraction” and something that could be “gamed” by using loopholes to circumvent the intent.
“The goal is to solve the problem,” he said. “My view would be that we should try to solve the problem rather than passing an amendment to the constitution that would say somebody should solve the problem. Why don’t we solve the problem?”