Retreat from Debt Mountain - chicagotribune.com

Retreat from Debt Mountain - chicagotribune.com

How fitting: In the final hours of 2012, as Congress and the White House lived down to their puny ambitions for a short-term "fiscal cliff" deal, our federal government blithely crashed into its borrowing limit: $16.394 trillion in taxpayer debt. Yes, Treasury Secretary Tim Geithner says that's merely a technical inconvenience. The feds can play around in the petty cash drawer and avoid actual default for a few more weeks. But look at how official Washington once again has snatched defeat from what might have been the jaws of victory.

We're not speaking only of Monday's decision to lurch over the fiscal cliff, with its promise of tax increases and across-the-board spending cuts, for at least a day. We're speaking primarily of Debt Mountain, the much more enduring risk to the present and future of America and its economy. You heard almost nothing Monday about that towering threat.

Most Americans are at least grudgingly aware that their government — especially Medicare, Medicaid, Social Security and the rest of its entitlement infrastructure — cannot continue to run trillion-dollar annual deficits. The vast majority of those Americans surely wanted other people, rather than themselves, to bear the burden of spending cuts. But with bipartisan leadership from both ends of Pennsylvania Avenue (see 1986: Reagan, Ronald, and O'Neill, Tip), the nation might have been coaxed into a spirit of sacrifice. Surely Washington wouldn't let the fiscal cliff crisis come and go without an attack on Debt Mountain.

Instead, today's leaders on Capitol Hill and in the White House are arguing over proposals that would let that mountain continue to grow. What's more, they have let uncertainty about taxes and spending manhandle the U.S. economy. In their arrogance they have behaved as if their disputes are All About Them, with only lip service for the millions of Americans who are their collateral damage:
Employers, workers, households that invest in the nation's future — these cohorts and many more have watched the fiscal cliff fiasco with increasing fright. In the end, both Democrats and Republicans have spent the last weeks playing small ball — negotiating a deal far short of the $4-trillion-over-10-years bargain that they famously bungled in mid-2011.

The projections under discussion Monday night were of much smaller orders of magnitude: perhaps $600 billion in new revenue over 10 years, plus whatever spending cuts Democrats would accept.
Comprehensive tax reform? Provisions to stoke hiring and economic growth? Structural fixes for entitlement programs that are sinking toward insolvency? Nah. This bunch isn't up to any of that.

In sum: Blessed with a spectacular opportunity to aggravate Americans and achieve long-term solutions by reaching what we've long called a Go-Big agreement on deficits and debt, Congress and President Barack Obama instead stand ready to aggravate Americans, put no long-term solutions in place, and retreat from Debt Mountain.

That mountain is taller than most Americans realize: Writing in The Wall Street Journal on Nov. 26, two ex-congressmen — Chris Cox, former head of the Securities and Exchange Commission, and Bill Archer, a former chairman of the House Ways and Means Committee — laid out taxpayers' total debt, which includes entitlement obligations not counted in that $16.394 trillion. "In reality," they wrote, "the reported budget deficit is less than one-fifth of the more accurate figure." So is reported debt.

How so?

You won't be surprised that Washington permits itself to live by much looser accounting rules than it imposes on private-sector companies. The actual liabilities of the federal government, Cox and Archer calculate, total $86.8 trillion, including an unfunded liability of $42.8 trillion for Medicare and a comparable $20.5 trillion for Social Security.

Which would mean that every one of the 315 million adults, children and haplessly indebted infants in the U.S. own a $275,000 share of that total federal liability.