The debt de­bate

Ex­perts dis­pute perils of not bal­anc­ing the na­tion’s books

The Washington Times Weekly - - National - BY DAVID M. DICK­SON

Bud­get plan­ners dif­fer on the de­tails, but they agree on one thing: There will be mas­sive in­creases in the na­tional debt dur­ing each of the next five years. Not every­one is alarmed by the ris­ing na­tional debt or the re­cent bud­get deficits, which to­tal more than $2 tril­lion over the 2002-08 pe­riod. “Bud­get deficits are such a small part of the eco­nomic equa­tion, they are to be ig­nored,” said Ryan El­lis, tax pol­icy di­rec­tor at Amer­i­cans for Tax Re­form.

“When com­pared with the bal­ance sheet of the na­tion,” deficits are “mi­nus­cule,” said James Gal­braith, an econ­o­mist at the Uni­ver­sity of Texas who es­sen­tially ig­nores the $4.2 tril­lion in in­tragov­ern­men­tal debt. “Debts from one gov­ern­ment agency to an­other are, of course, merely ac­count­ing,” he said.

An op­pos­ing school of thought pre­dicts dire con­se­quences.

“Na­tional debt is grow­ing at an alarm­ing rate at the same time that peo­ple will be­gin to rely on the gov­ern­ment for So­cial Se­cu­rity and Medi­care more and more,” said Ad­di­son Wig­gin, co-au­thor of the book “Em­pire of Debt” and ex­ec­u­tive pro­ducer of the doc­u­men­tary “I.O.U.S.A.,” which is play­ing at the­aters through­out the coun­try.

Mr. Wig­gin con­sid­ers the na­tional debt to be “the great­est threat to na­tional se­cu­rity apart from a ter­ror­ist ac­quir­ing a nu­clear bomb.” Fis­cal chal­lenges fac­ing the United States, he said, are “much greater than the costs of the cur­rent wars” in Iraq and Afghanistan.

David Walker, the for­mer U.S. comp­trol­ler gen­eral whose “Fis­cal Wake-Up Tour” is doc­u­mented in “I.O.U.S.A.,” agrees.

He ar­gues that Amer­ica’s fis­cal ir­re­spon­si­bil­ity is a greater dan­ger to the repub­lic than “some­one in a cave in Afghanistan or Pak­istan.” In re­cent tes­ti­mony be­fore the House Bud­get Com­mit­tee, Mr. Walker warned: “Based on his­tor­i­cal tax lev­els and ab­sent mean­ing­ful en­ti­tle­ment, spending and tax re­forms, the United States will face debt bur­dens in the fu­ture that would make Third World na­tions look thrifty.”

Three very dif­fer­ent bud­get plans this year — the White House bud­get, the Demo­cratic- crafted con­gres­sional bud­get res­o­lu­tion and an al­ter­na­tive bud­get of­fered by House Repub­li­cans — have two things in com­mon. First, by us­ing highly ques­tion­able as­sump­tions, all three five-year blue­prints are able to project mi­nus­cule bud­get sur­pluses in 2012 and 2013. Sec­ond, they all fore­cast mas­sive in­creases in the na­tional debt dur­ing each of the next five years, in­clud­ing the sur­plus years.

All three bud­gets pro­vide the cus­tom­ary five-year break­down (fis­cal years 2009 through 2013) for out­lays, rev­enues, deficits and debt. Each plan as­sumes that the na­tional debt will ap­prox­i­mate $9.6 tril­lion when fis­cal 2008 ends on Sept. 30. That debt level is di­vided be­tween $5.4 tril­lion in pub­licly held debt (which es­sen­tially rep­re­sents the net bal­ance of all pre­vi­ous sur­pluses and deficits) and $4.2 tril­lion in gov­ern­ment-ac­count debt (mostly trust funds).

Each five-year blue­print would raise the na­tional debt by more than $2.25 tril­lion, which is sig­nif­i­cantly higher than the change in pub­licly held debt re­sult­ing from an­nual bud­get deficits and sur­pluses.

What ac­counts for such huge dif­fer­ences be-

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