Ben Bernanke, chairman of the Federal Reserve. He has told Congress that if we keep on borrowing at the current rate, there will be less private investment, less economic output, lower incomes and reduced standards of living. If the government does not begin to rectify things, watch out for “financial turmoil,” he said, forecasting a vicious circle in which debt grows ever higher and solutions get harder and harder to come by.
Kenneth Rogoff and Carmen Reinhart, professors at Harvard University and co-authors of “This Time is Different: Eight Centuries of Financial Folly.” Here are two of the world’s foremost experts on debt, and here is one thing they say: When gross national debt is over 90 percent, GDP growth is going to shrink. Our gross debt (both money owed to the public and by the government to itself) is now over 100 percent of GDP. Our economic growth in the second quarter of this year was 1.5 percent, compared to an average since World War II of 3.3 percent. Low growth equals low everything else, including low employment.
Erskine Bowles, former White House chief of staff under President Bill Clinton, and retired Republican Sen. Alan Simpson of Wyoming. They were co-chairmen of the National Commission on Fiscal Responsibility and Reform established by Obama. Bowles says that without tax reform and dramatic spending cuts, “we face the most predictable crisis in the country’s history.” Simpson, while also criticizing Republicans, says Obama needs to get serious about whittling down entitlements, his “sacred cow.”
The great tragedy is that Obama walked away from the Bowles-Simpson compromise on debt, a workable plan that required both Democrats and Republicans to relinquish something they held dear. Here was a chance for bravery, for leadership, for Obama to do something for his country instead of just himself, and he said no thank you. He could still sign on, as a matter of fact, but I guess he is too worried about Romney’s tax returns.
Jay Ambrose is the former Washington director of editorial policy for Scripps Howard newspapers.