Apply a coat of paint directly on your vehicle’s rust spot, and what happens? It looks better. For a while. If you don’t do the hard work — sanding, priming and the like — the rust soon eats through the paint and the unsightly spot returns with a vengeance.
The paint and rust analogy applies to recent and ongoing reports out of Washington reflecting the short- and long-term health of the U.S. government and economy. The reverberations reach us here in the tri-state area.
With only an occasional blip, the U.S. economy has been on a winning streak. On Friday, we learned that employers added more than a quarter-million jobs just in April. That report, continued low interest rates, low unemployment and other positive indicators tend to ease concerns about an economic slowdown being imminent.
That’s all good news. But in many respects, they are like the aforementioned paint.
Politicians, particularly those with Twitter accounts, exhort Americans to focus on those positive reports — and only those reports. The newly painted surfaces. The shiny objects. They know it’s easier to win votes by pointing to what’s attractive than by discussing — not to mention solving — difficult and painful decisions. The rust.
But the rust is there.
For decades, warning flags have been raised about federal debt, budget deficits and endangered entitlement programs. Politicians tend to offer assurances that those problems are distant, overstated or something that will miraculously solve themselves through economic upturns.
And so they kick the proverbial can down the road.
Increasingly, however, the end of the road is coming into view.
The Congressional Budget Office, which doesn’t have to placate voters or stand for election, last week updated its budget and economic forecasts for the next decade. The numbers are not pretty. The agency predicts that the federal budget deficit — overspending — will hit $896 billion this year and top $1 trillion annually as soon as 2022. And that could be a best-case scenario. The projections assume no changes in laws, no recession and temporary tax cuts not being made permanent.
“How many more dire warnings will it take before our leaders address the nation’s dismal fiscal picture? Rather than addressing the rapid growth of health and retirement costs, the last Congress cut taxes and increased spending by a combined $2.4 trillion,” stated Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Now we’re talking about $2 trillion more of spending, and as much as $2 trillion on top of that for infrastructure, with virtually no word of how we will pay for them. At some point, the fiscal recklessness has to stop.”
Indeed. If the staggering numbers of the growing federal debt can’t command enough of the public’s attention, perhaps the prospects of the Social Security program going under will.
In their recently released annual report, Social Security trustees warned that, without major changes, Social Security will be insolvent in just 16 years. The ongoing funding imbalance — more money going out to beneficiaries than is coming in from U.S. workers — is going to get worse. Without serious decisions — none of them will be popular — the impacts will include reduced benefits and higher taxes.
Elected officials past and present, Republican and Democrat, deserve plenty of blame for this situation, but so do voters.
After all, politicians are fully aware of voters’ longstanding aversion to tough decisions — tax increases, benefit cuts and the like — when those decisions adversely impact voters. How else do you explain voters thanking politicians for tax cuts when those cuts are adding to the IOU that must be covered by our children, grandchildren and great-grandchildren?
The sooner voters come to the realization and acceptance that they, too, must pay a price for the debt and deficit spending, the sooner they will elect politicians with the courage to make the tough and unpopular decisions that are nonetheless necessary for our country in the long term.
We can’t continue to paint over this problem. It’s going to take sandpaper, elbow grease and primer before real solutions will stick.