More than 100 students, teachers, and area residents attended a high-level panel event on U.S. monetary policy at the Harris School for Public Policy Studies on Wednesday.
The “Fiscal Wake-Up Tour” was presented by the Harris School and the Concord Coalition, a nonpartisan think tank formed in 1992.
The event, moderated by Harris School lecturer Charles Wheelan, included Robert Bixby, executive director of the Concord Coalition; David Walker, comptroller general of the United States; Isabel Sawhill, senior fellow at the Brookings Institute; and Stuart Butler, vice president of Domestic and Economic Public Policy Studies at the Heritage Foundation.
The four speakers covered different aspects of the U.S. government’s fiscal situation, but all presented a pessimistic outlook as the federal deficit continues to increase and baby boomers head toward retirement.
For example, entitlement programs like Social Security, Medicare, and Medicaid have increased from one percent of federal spending in 1966 to 43 percent today. According to Walker, from 2000 to 2005 the country saw an increase of $26 trillion in total long-term liabilities.
To make matters worse, politicians with short-term reelection interests have no incentive to raise issue with long-term consequences, all of the speakers agreed.
“Doing nothing to avoid such a gut-wrenching outcome would be an act of both fiscal and generational responsibility,” Bixby said, noting that younger generations will ultimately suffer economically unless tough decisions are made.
“There are no free-lunch solutions,” Bixby said. “Cutting waste like the bridge to nowhere won’t solve the problems. We have to have tradeoffs—raise taxes at comfortable levels and/or cut spending.”
Sawhill, of the center-left Brookings Institute, discussed U.S. dependence on foreign consumers of national debt: 44 percent of total public debt in the U.S. is borrowed from other countries.
“If foreigners’ taste for American assets and bonds change, we would be in big trouble,” she said.
Stuart Butler, an analyst for the conservative Heritage Foundation, shared the long-term fears of his co-panelists but warned against high taxes.
“If we have European levels of taxation, we have lower European levels of growth and higher unemployment,” he said.
The “Fiscal Wake-Up Tour” is traveling across the country to appeal to students, business leaders, and local media.
The Chicago tour stop came just one day after the 2006 midterm elections, a fact that was not lost on the panelists.
“Part of the importance of the Fiscal Wake-Up Tour is that we hope that any serious 2008 candidate will deal with these issues and not just worry about getting reelected,” Walker said.