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We should be glad that the annual budget deficit has declined substantially as a percentage of the gross domestic product. The deficit was 2.5 percent of GDP in 2015, as compared to 10 percent in 2009. The GDP comparison matters because it shows whether the deficit is a drag on the economy. A low percentage generally shows it is not.
But what we should worry about is that the federal debt continues to go unaddressed. The debt, which is the accumulation of our annual deficits over time, now stands about $19.4 trillion. (You will hear people talk just about the public debt, which is the portion of the debt that is borrowed from the public at large, but does not include money borrowed from the trust funds for Social Security and Medicare. The 19.4 trillion figure includes those government trust fund borrowings.)
GOP House Speaker Paul Ryan, R-Wis., continues to warn about the dangers of that large number and the pressures that keep driving it upward. But otherwise the topic has not been center stage in our current national debate. The Committee for a Responsible Federal Budget explained recently in a report why it should be a focus of discussion:
The next president will confront a number of fiscal challenges during his or her tenure, including growing deficits, virtually unprecedented levels of debt, and an aging population. Currently, debt held by the public totals $14 trillion, or 75 percent of Gross Domestic Product (GDP), which is nearly twice the historic average and the highest share of the economy other than right after World War II. The debt is projected to grow as a share of the economy to almost 86 percent by 2026 and close to 130 percent by 2040.
Costs for Social Security and Medicare are the driving force behind those scary numbers, including the projected GDP figure for 2016. Syndicated columnist Scott Burns reported this weekend that those two programs had to borrow $354.5 billion in 2015 to cover their shortfalls. And that is in just one year, representing 23 percent of total spending on those programs.
What we need is substantive, front-and-center proposals about how to modernize those programs. The more they drive up the debt, the more difficult it becomes to control that debt. What’s more, money that could go to more creative uses, like financing the next Internet or some such technological breakthrough, flows instead to buying safe treasury bills that finance our borrowings.
This will sound pretty wonky, but here’s one point worth discussing: Changing the delivery of health services could help control Medicare’s costs. Instead of paying for volume of services, pay based upon outcomes. And we should have a debate over changing the cost-of-living calculation for Social Security and means-testing eligibility for the program.
Debates over such reforms have happened in Congress and policy circles. But the national campaign should bring them to our attention in a more direct way. After all, that is what elections are about.
William McKenzie is editorial director for the George W. Bush Institute, where he also serves as editor of The Catalyst: A Journal of Ideas from the Bush Institute.
Active in education issues, he co-teaches an education policy class at SMU’s Simmons School of Education and Human Development. He also participates in the Bush Institute’s school accountability project.
Before joining the Bush Institute, the Fort Worth native served 22 years as an editorial columnist for the Dallas Morning News and led the newspaper’s Texas Faith blog. The University of Texas graduate’s columns appeared nationwide and he has won a Pulitzer Prize and commentary awards from the Education Writers Association, the American Academy of Religion, and the Texas Headliners Foundation, among other organizations. He still contributes columns and essays for the Morning News and The Weekly Standard.
Before joining the News in 1991, he earned a master’s degree in political science from the University of Texas at Arlington and spent a dozen years in Washington, D.C. During that time, he edited the Ripon Forum.
McKenzie has served as a Pulitzer Prize juror, on the board of a homeless organization, and on governing committees of a Dallas public school. He also is an elder of the First Presbyterian Church in Dallas, where he lives with his wife and their twin children.Full Bio
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