A call for fiscal sanity

Dallas Morning News: Federal Reserve Board chairman Ben Bernanke delivered a message in Dallas on Wednesday that reflects the sobering reality of a nation that must get serious, sooner not later, about correcting its federal deficit.

America can’t continue its current spending levels without strangling its long-term fiscal health.

“The nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above,” Bernanke warned in a speech to the Dallas Regional Chamber.

And if the nation fails to make these hard choices and “demonstrate a strong commitment to fiscal responsibility,” the Fed chairman said, “in the longer run we will have neither financial stability nor healthy economic growth.”

These uncomfortable truths ... are top of mind not just with the Fed chairman but with ordinary Americans as well.

Debt

The national debt stands around $12.5 trillion and is on pace to reach 100 percent of the gross domestic product by 2022. By 2014, the cost of servicing interest on that debt will outstrip all annual domestic spending outside of defense and entitlements such as Medicare and Social Security. Moreover, current federal spending consumes about 25 percent of GDP, while taxes bring in about 15 percent of GDP.

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