Maya is the President of the Committee for a Responsible Federal Budget. The committee itself has been around for a couple decades at this point and came about after several members of Congress left and realized how difficult it really is to be fiscally responsible with a government budget.
It’s very difficult to govern in a fiscally responsible manner in a political environment because, in many ways, those two things are completely at odds with each other.
Fiscally responsible is simply the notion that you will be paying for your budgetary items yourself and not pushing the cost onto the future. Politics puts pressure on politicians to promise as much as possible and defer the cost to someone else.
In terms of where we are now, the current fiscal path is dire. We have just come out of one of the times to borrow and borrow we did. The US borrowed $6 trillion in response to the pandemic and the debt-to-GDP ratio is about to reach its highest point in history.
The difference between the last time the debt-to-GDP ratio was this high (after WW2) and now that demographic is working against us. We are now slated to be running budget deficits of well over $1 trillion indefinitely and the debt-to-GDP is on a trajectory to grow faster than the economy every year from now on.
When your debt is growing faster than your economy is the definition of unsustainable. In order to flip that and have the economy grow faster than the debt, we need to bring our deficits and debt trajectory down.
When Maya started looking at this problem she was mainly concerned with the economic risks like inflation and debt crowding out investment, and those risks still exist today, but now we are also dealing with polarization.
We are so polarized now that both sides of the aisle care more about beating the other party than doing what’s good for the country. One of the easiest ways to win over the public is to give them things for free, and this tactic happens on both sides.
If we don’t get a handle on the dividing mentality that runs politics right now, we are not going to be able to solve the debt problem.
We have to look at the costs to taxpayers to figure out if a proposal is worth it, but when you push the cost onto the future and borrow money to pay for it the cost calculation is thrown off.
The truth is that there isn’t enough money in the pockets of the wealthy if you want to expand the government. Taxing the wealthy would not bring the debt to a manageable level, and certainly not if you want to expand government programs.
Universal broad-based taxes will have to be part of the picture, along with reductions in spending. Politicians need to be honest with voters about paying for the things that they want and how much they cost.
We can’t stay on the path we are on because it will do too much damage to the economy and our strength, and it will hurt families in an ever growing way.
Maya used to be confident that lawmakers would eventually be able to compromise and come up with a plan, but not so much anymore. Politicians are being pulled to the extremes and it’s no longer a given that they will be able to come together for the good of the country.
If we hadn’t postponed everything, we would have had much easier choices to make. Now, we will probably need another revenue source like a VAT or carbon tax. The solutions are available, but the political environment and leadership isn’t.
