The really big spill is that of US red ink

Opinion: July 6, 2010 at 12:00a.m.

Put this down on your calendar. Six months from now, we’re either starting finally to control our federal debt or we’re sending markets and creditors an awful signal.

No matter how bad the Gulf Coast looks now, December will be the year’s most important month. That’s when President Barack Obama is supposed to receive the report from the “debt commission” he largely appointed this year.

Ho-hum, you might think, but its task is to present a plan for reining in our $13 trillion debt. The oil spill, our worst environmental disaster, eventually will get cleaned up, but there is no guarantee our debt will, if we don’t start attacking it — now.

Third party needed

It’s a shame we need a commission to produce a plan that Congress should create, but there’s little chance of that from the Democrats who run Capitol Hill. And even if they did, Republicans in their state of oppositional defiance-disorder probably would never agree to it. So it’s time to let a panel suggest changes for both parties to approve or reject.

Rep. Jeb Hensarling, the Dallas Republican, sits on that commission, so I called him last week to see what’s happening. He’s one of the GOP’s fiercest fiscal watchdogs, and he had both reassuring and worrisome things to say.

Interestingly, he gave Erskine Bowles, the commissioner’s co-chair, good marks. Former GOP Sen. Alan Simpson is the other co-chair, but Bowles’ role is critical, as since Democrats dominate the panel.

According to Hensarling, Bowles, Bill Clinton’s former chief of staff, is “getting people focused on common facts and challenges.” He’s also getting the panel to consider “what fiscal responsibility looks like.”

It’s all relative

Of course, responsibility is in the eye of the beholder. So Hensarling’s second point is equally important: “Progress and success are not the same thing.”

Here’s an example of the difference: The commission could present a five-year plan that balances revenues and spending but exempts interest payments on the debt, a big part of the budget.

I’m all in favor of half-loaves, but Hensarling is right to suggest we should not be duped into thinking that strategy is a touchdown. Interest payments now cost $207 billion annually but are projected to hit $720 billion in 2020.

Here’s another reason this approach isn’t success. The Wall Street Journal reports that the International Monetary Fund uses this standard to assess “the world’s poorest countries trying to get their fiscal houses in order.”

We can call this approach progress, as Hensarling says. But the United States needs to do better than the world’s poorest nations if we want a strong economy.

Tough choices

The commission instead should present a plan that truly puts the budget in balance. That will require ugly choices, but we can’t keep up this pace, with public debt starting to consume a scary amount of our gross domestic product.

Changes once thought unthinkable must be considered: Spending cuts. Ending tax exemptions. Reforming entitlement programs.

The place to start is with Social Security. The stock market’s recent collapse has taken private Social Security accounts off the table, but we still could change how benefits are calculated so they are linked to prices on a basket of goods instead of wage rates.

That idea surfaced when President George W. Bush tried to reform Social Security, and it could save a bunch. So could phasing in a higher age limit for receiving Social Security benefits.

Just a start

No one expects this panel to have all the answers this far from the finish line. But, readers, this is our last best hope.

If the commission doesn’t produce a realistic plan — one that involves spending, tax and entitlement changes — we will be on an out-of-control deepwater economic rig. I don’t know about you, but one mega-disaster a year is enough for me.

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