WV fiscal summit looks at nation's financial woes - Business, Government Legal News from throughout WV

WV fiscal summit looks at nation's financial woes

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The United States is now more than $16 trillion in debt and continues to borrow money from other countries. Meanwhile, the interest rate on those loans increases, meaning the national debt will continue to rise as well.

But the Bowles-Simpson plan, put together by a bipartisan debt commission in 2010, aims to cut spending and reappropriate federal money in an effort to prevent the deficit from skyrocketing further.

Sen. Joe Manchin, D-W.Va., hosted a first-of-its-kind fiscal summit at the Culture Center in Charleston Sept. 10. Manchin brought in Erskine Bowles and former Sen. Alan Simpson, R-Wyo., to talk about their plan and answer questions from the audience. President Barack Obama tasked both men with heading up the debt commission in 2010 after Congress failed to negotiate a budget. Two years later, a budget still hasn't been passed and the country is coming up on some important deadlines that could impact not only federal spending but also taxpayers' pocketbooks.

"The fiscal path this nation is on is simply not sustainable," Bowles said. "These deficits of over $1 trillion a year are like a cancer — a cancer that will destroy our country from within."

Bowles said its interesting to hear from taxpayers where they think federal dollars are going. They typically answer with things like foreign aid and oil subsidies, but Bowles and the debt commission identified four major areas where the federal government can rein in spending.

The first is health care.

"We spend twice as much as any other developed country in the world on health care. Twice as much," he said. "That's where you talk about it on a per capita basis or percentage GDP. I could probably live with that if our outcomes were twice as good as any other developed country, but they're not. We rank somewhere between 25th and 50th in things such as life expectancy, infant mortality."

Bowles pointed out that in the 1980s, health care made up only about 10 percent of the federal budget. That figure increased to about a quarter of the budget now and will likely increase again to more than one-third of the federal budget by 2020. But in 2030, the health care will cost the government much more.

"If we don't do something to control the rising cost of health care, then by the year 2030, all we'll be able to afford is to provide health care to a couple of old geezer like me and Al and buy a few tanks," Bowles said. "That's it. Health care is our No. 1 challenge."

The second challenge is national defense spending. Simpson said no one wants to acknowledge the exorbitant amount of money the federal government spends on defense, but the U.S. spends more on defense than the next 15 countries combined.

"It's extraordinary that $540 billion is the defense budget for the top 15 other countries. Ours is $715 billion," Simpson said.

Some of that money goes to Department of Defense schools that were built in the World War II era and military bases in Europe. Though the U.S. is often viewed as the world's policeman, Bowles said the country can't bear that responsibility much longer.

"I personally believe America is bearing a disproportionate amount of responsibility for global world peace," he said. "I don't believe America can afford to be the world's policemen."

The third challenge is America's tax code, one Bowles called "inefficient, ineffective and globally anti-competitive."

"You could not dream up a stupider one if you tried," he said.

The commission recommended the base be broadened, code simplified, wipe out backdoor spending in the tax code and use 92 percent of $1.1 trillion in revenue to reduce income tax rates and the remaining 8 percent of that money to reduce the deficit.

The fourth challenge, according to the commission, is the interest rate on the national debt. While the U.S. is paying $250 billion in annual interest on these loans, that's relatively cheap compared to what it could be paying. Bowles said interest rates in the 1990s, when he served as chief of staff under President Bill Clinton, the federal government could be paying at least $650 billion annually.

"If we do nothing and interest rates stay right were they are, we'll be spending $1 trillion on interest," Bowles said.

It's not just the amount of money spent on interest that hurts, its the fact that the money is not being spent in America.

"What makes it doubly bad for us is that its $1 trillion that will be spent of our money in Asia to educate their kids, to build their infrastructure, to do research there so the next new thing is created there and jobs go there and not here," Bowles said. "When these politicians of both parties say don't worry about this, we can grow our way out of this problem, we can't solely grow our way out. We can have double digit growth for years and not grow out of this problem."

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