Copyright 2009 Richmond Newspapers, Inc.All Rights Reserved Richmond Times Dispatch (Virginia)
December 27, 2009 Sunday Final Edition
SECTION: COMMENTARY; Pg. E-01
LENGTH: 571 words
HEADLINE: It’s Time to Put America’s Financial House in Order
BYLINE: JOHN SHERMAN
This New Year’s, we will ring in a new decade…and a staggering national debt. Furthermore, our annual deficits are expected to be extraordinarily large for years to come. U.S. debt is expected to reach $12.1 trillion by New Year’s Eve. It’s so high that Congress has to increase the federal debt limit to keep the government in business. Most agree that, in the short term, increased government spending has been necessary to stimulate the economy in these difficult times. But what are the long-term implications of such debt? Not enough attention has been paid to that question until earlier this month, when the Miller Center of Public Affairs at the University of Virginia convened a conference on the consequences of governing in an era of debt and deficits. Former government officials, members of the Federal Reserve, economists, and academics came together in Charlottesville for a serious bipartisan discussion on this very serious issue. For two days, conferees, such as former White House Budget Director Alice Rivlin and scholars from several leading universities, including UVa and William and Mary, tackled some difficult questions. How much can we afford to spend? Will the current crisis require us to make changes to entitlement programs such as Medicare and Social Security? Do domestic obligations require us to rethink America’s role in the world? Is reforming U.S. fiscal policy even feasible? After two days of engaging panel discussions, conferees agreed on many key points, including: *U.S. debt needs to be reduced to below the internationally accepted benchmark of 60 percent of gross domestic product to about 40 percent of GDP. GDP is the total market value of all goods and services produced in the country and is currently about $13 trillion to $14 trillion. U.S. debt is greater than 60 percent of GDP – and with current deficits it will not take long to get to 100 percent. *Spending on entitlement programs, such as Medicare, Medicaid, and Social Security, needs to be brought under control. Proposals included raising the retirement age, the age of eligibility for Social Security, and the income level beyond which one does not receive Medicare and Social Security benefits. *U.S. debt is threatening American competitiveness around the world, and the growth of the deficit decreases the willingness of overseas investors to lend to the U.S. government. To retain its global economic leadership, the U.S., like consumers, must work on saving more and spending less. *Any reform will require bipartisan agreement among lawmakers. This is not impossible, as most significant legislation in the past century has been the result of bipartisanship. Why should you care? Because this is your money! Could you run your household with huge deficits and debt without the threat of foreclosure? If Washington doesn’t get its finances in order, it could mean you will be paying more taxes, paying higher interest rates on your home loan or credit cards – or will receive reduced benefits on programs such as Social Security. Wake up America: We need to put our financial house in order. The Miller Center has started the conversation. Let’s hope Washington is listening.John Sherman is a retired businessman in Richmond with close to four decades of experience in the financial industry. He is a member of the board of directors of The Miller Center Foundation. He can be reached at (804) 782-8756.
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