Yesterday, on ABC’s “This Week,” Speaker Boehner (R-OH) said two things that do a disservice to the American people. First, he said he and the President “trust each other,” and a moment later said “Absolutely” when asked if he trusted the President, saying “there is no issue there.” Second, he said the debt “is not an immediate problem.”
There are many reasons the Speaker shouldn’t even be thinking these things, let alone saying them. Here are four:
1. The President is not trustworthy. He has been dishonest on the alleged need to raise taxes, the alleged harm the sequester will do to the American economy, and he has been dishonest on Fast & Furious and Benghazi, among other things. By saying he trusts the President, the Speaker is giving a false impression to the American public, and more ammunition for the mainstream media to praise the President as being an allegedly reasonable partner in future debt and deficit negotiations.
2. The debt is a problem right now. Consider the now-famous report showing a debt-to-GDP ratio of 90% or greater (America is over 100% of debt as compared to GDP) slows economic growth by about 1.7% annually when compared to nations debt levels between 60% and 90% of GDP.
What does this mean in practical terms? If America had possessed its current level of debt (as compared to GDP) from 1970 through 2010, the nation’s GDP would have been cut almost in half. This is the future America currently faces – a distinction Tea Party Patriots National Coordinator Jenny Beth Martin made clear in her speech at CPAC on Saturday.
3. The debt is also a problem right now because, as the Congressional Budget Office (CBO) noted in February, even under current law (the politically unrealistic, and fiscally optimistic, method of budget analysis the CBO uses for part of its budget projections), which includes tax increases and sequestration:
…[F]ederal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects (see Summary Figure 1).
And later in the report:
If the amount of debt held by the public remains so large, federal spending on interest payments will increase substantially when interest rates rise to more normal levels. Because federal borrowing generally reduces national saving, the stock of capital assets, such as equipment and structures, will be smaller and aggregate wages will be less than if the debt were lower. In addition, lawmakers will have less flexibility than they ordinarily might to use tax and spending policies to respond to unanticipated challenges. Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.
Is the debt a problem right now? Economic reality and the CBO seems to think so.
4. Finally, the debt is a problem because of expected future deficits. Were America to have its current GDP and only a $1 trillion debt, we would have a faster-growing economy that could absorb more of the crushing debt obligations from Social Security, Medicare, pensions, and other programs coming our way. Interest rate payments would be lower, as would future interest rates – payments that are also expected to skyrocket, around the same time Social Security and Medicare costs are projected to rise dramatically, about a decade from now.
Later on, the Speaker critiqued the President, saying that while he agreed the debt isn’t a problem right now, he added, “It is a looming crisis that requires immediate attention.” Tea Party Patriots agrees with the Speaker on this point, but it is disturbing that he is ignoring, or does not understand, the clear fiscal and economic realities that come from today’s level of debt. It is even more disturbing that he places his trust in President Obama, who has all but ignored America’s fiscal situation. Statements like this are one of the many, many reasons Speaker Boehner has “trust issues” within his own conference and the Tea Party at large.