Debt iceberg looms large for Obama

By William Mckenzie

Barack Obama signed the stimulus bill Tuesday, so when does he make good on his promise to hold a fiscal responsibility summit?

As much as he might want to exult, he doesn’t have the luxury of waiting. In fact, he has no option — not with $56 trillion in debt coming at us like an iceberg, as deficit warrior Pete Peterson put it recently in a New York Times ad.

One of the more interesting — and encouraging — meetings that took place last week amid the rush to pass the stimulus was Obama hosting the conservative Blue Dog coalition of Democratic fiscal realists. Yes, almost all of them hupped-to and voted for the stimulus, but they nonetheless were looking over the horizon at what’s coming.

Good for them. Democratic conservatives must keep the president focused on the iceberg. For every deficit-minded Democrat, others like House appropriations chair David Obey would love to spend billions more on the Obama agenda of green jobs, health care and education.

Some of those priorities are worthwhile, but the stimulus bill and bank rescue effort together will add at least $1.5 trillion to the federal debt. We can’t afford to keep going this way, not with each family owing about $500,000 for the nation’s long-term liabilities.

Given that prospective burden on families, all future spending requests must face this question: Is this proposal more important than reducing that monster debt?

Democrats like Rep. Jim Cooper of Tennessee will be especially important as his party creates priorities. He and Republican Frank Wolf have authored legislation to create a bipartisan commission to overhaul entitlement programs, the tax system and other spending issues. Congress and the president would vote up or down on the commission’s proposals, keeping lawmakers from nitpicking them to death.

If we’re lucky, the fiscal accountability summit’s participants will get behind that legislation, which has a companion bill in the Senate.

I worry, though, that taking on so many facets of our fiscal woes could bog down the commission. For example, it may be easier to come up with ideas to reform Social Security than to overhaul the tax code. By linking them, a failure in either part could bring down the whole shebang.

Bob Bixby of the deficit-battling Concord Coalition acknowledges that danger but sees a chicken-and-egg phenomenon with our fiscal woes.

Medicare spending

Consider Medicare. We need to fix its runaway spending soon because its hospital trust fund runs out of cash by the middle of the next decade. But the solution also rests in coming up with a better way to deliver health care to all Americans.

This balancing act will require a Democrat like Cooper, both a health care expert and an economic conservative. He will need to keep a commission’s debate focused on the end point of getting us out of so much debt.

Paul Volcker also will be crucial. The former Fed chairman cracked inflation under Ronald Reagan, so he has the right fiscal credentials. He’s also a Democrat who has Obama’s ear.

If there’s anything good about this crisis, it’s that Americans could be more receptive to dealing with the coming debt problem. “People now realize what a crisis looks like,” as Bixby told me last week. They see what’s happening to debt-loaded banks and realize that our own treasury can’t risk the same.

Obama undoubtedly pushed the stimulus and bank plans because he believes they are right for the economy. But those measures, plus a recession, could increase the national debt from 40 percent of gross domestic product today to 60 percent next year. That’s why what happens next is as important as what the president signed Tuesday.

X William McKenzie is an editorial columnist for The Dallas Morning News. Distributed by McClatchy-Tribune Information Services.