The Economy: A Persistent Failure to Act Will Undermine the Quality of America’s Future

By Susan Collins

There have been hopeful economic indicators recently – but not so encouraging that Congress can afford to continue to sit on its hands with regard to issues that are foundational to our future economic well-being.  Yet I am deeply concerned that is precisely what is occurring.

Congress’s inaction on jobs, economic growth, and deficits and debt has resulted in the worst post-recession economic recovery in our history, and a persistent failure to act will undermine the quality of America’s future.

In fact, Federal Reserve Chairman Ben Bernanke blamed the polarized debate on these issues for disrupting the economic recovery.  A Federal Reserve study also concluded that had there been no policy uncertainty over the past four years, the U.S. unemployment rate would have been closer to 6 or 7 percent, rather than the 8 percent to 9 percent actually registered.

Fast forward to today, and at the current rate of monthly job growth (an average of 194,000 net new jobs per month over the past six months) it would take nearly ten years to reach prerecession employment levels.  And even if the economy were to consistently begin growing by 200,000 jobs per month, it would take 7.5 years to return to prerecession levels!

Now, contrast these facts with the reality that Congress has passed a grand total of 13 bills this year, and not one of them is related to jobs.  Are we really prepared to say this is the best we can do?  This is a can-do country with can-do people and a can-do spirit.  Isn’t it about time we had a can-do Congress to match?

So it is all the more disturbing that momentum for progress on issues critical to our overall economic health, such as our federal deficits and debt, have been even further eroded in light of recent estimates from the non-partisan Congressional Budget Office (CBO).

The CBO has reduced its previous deficit estimate for this year from $845 billion to $642 billion.  Yet, lest anyone believe this means all our problems are solved, this reduction is the result of two factors that are purely temporary — first, an upward estimate of revenues due to early payment of capital gains and dividend taxes resulting from the lower tax rates in 2012 and, second, a $95 billion cash infusion to the U.S. Treasury from Fannie Mae and Freddie Mac.

What is not sufficiently understood or apparently appreciated by Congress is that CBO projects the deficit will begin widening again in 2016 and resume its upward climb due to “the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.”

All of us should be concerned.  As the Washington Post has reported, interest payments will soar to 15 to 19 percent of the federal budget between 2015 and 2020, and in 2023 interest payments will total $900 billion.  And our national debt, which was 36 percent of GDP at the end of 2007, has now entered uncharted territory and is projected to reach 76 percent next year.  If current laws remain in place, debt will equal 74 percent in 2023 and then continue spiraling upward.

It is therefore essential that this blip of a temporary reduction on the debt and deficit radar not be interpreted by Congress as some kind of get out of jail free card, but rather a window of opportunity to act urgently to stem unsustainable debt and deficit growth in the future!

And yet as a result of this short-term deficit revision, it appears that Congress is instead lessening its attention to discussions of a “grand bargain” this year to reduce the federal deficit – and will instead focus on more modest restraints on federal spending. Congress still hasn’t convened a conference committee to work out the significant differences that exist between the House and Senate-passed versions of the 2014 budget. As a result, odds are now that the vast chasm will not be bridged by the end of this summer.

Moreover, the U.S. will reach its statutory debt limit again sometime in October or perhaps as late as mid-November.  At that point, if no action is taken, we will no longer be able to meet our debt obligations. Recent reports are that Republicans want an overhaul of the tax code and major changes to entitlements in exchange for raising the limit.  At the same time, however, Democrats want no pre-conditions.  So the two sides remain far apart.

As Tom Friedman recently wrote, “We wasted a time out these last 5 years” in America.  I worry we are about to waste another one unless we speak up and insist that our Senators and Representatives start compromising and reaching agreement on these crucial matters that will dictate our nation’s future.

This article originally appeared here. [http://www.olympiaslist.org/?page_id=11]