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The Worry Over Dealing with U.S. Debt
Washington’s inability to solve our nation’s debt problem is getting the attention of more than just politicians and economists. Now, average citizens are wondering what it will take to do something about it. From Phoenix, KJZZ’s Paul Atkinson reports.
A year ago, the debt crisis wasn’t a conversation you’d likely overhear around the watercooler. But now, more and more people are talking about, including Larry Hyde of Queen Creek and Mack Chasey of Tempe.
LARRY HYDE: “Well, it’s putting doubt in the confidence people have in our government and to pay their debts.” (07)
MACK CHASEY: “I’m worried that our credit rating will go down and that our country’s going to have to go into default.” (04)
A bill to avoid default and raise the debt ceiling was overwhelming opposed by Arizona’s Congressional delegation earlier this month. Only Representative’s Giffords and Grijalva voted for it. Representative Jeff Flake of Mesa was one of the more outspoken against it.
JEFF FLAKE: “We have no plan. We’re 14 trillion in debt, we’re piling up a trillion a year and we have no real plan to get out of it—that’s the problem.” (11)
The plan approved by Congress calls for 900-billion dollars in initial budget cuts, but left another trillion and a half dollars in cuts to a Congressional Super Committee. Flake isn’t hopeful it’ll make much of a difference.
JEFF FLAKE: “Unfortunately, I think their charge is a little too narrow. And we’re likely to get something that is another band aid that we’ll have to deal with shortly.”(10)
Many Republicans like Flake want to cut programs, while not raising taxes to eliminate debt. Democrats are willing to cut programs, but also want to raise revenue by increasing taxes and eliminating tax loopholes. Dennis Hoffman is an economist at A-S-U’s W-P Carey School of Business. He says everything will have to be on the table.
DENNIS HOFFMAN: “So if you want to get after the debt issue. It’s tough decisions. It’s not just cutting. It’s not just raising taxes. Its equal pain on both sides.”
Hoffman says major cuts will have to be made to federal spending, and that includes entitlement programs like Medicare and Social Security. But entitlement cuts alone won’t be enough according to Hoffman. The
A-S-U economist says additional revenue will be needed to fundamentally reduce the nation’s debt.
DENNIS HOFFMAN: “And I would say that this message needs to go out—not just to a handful of folks—not just to businesses, not just to people above a particular income level. But why not convey that message to everybody. ‘Hey we’ve got a challenge, people are going to have to pay more and people are going to have to accept less.’ Both of those have to happen simultaneously.”
A-S-U student Mack Chasey hopes the politicians in Washington heed the advice of experts like Hoffman.
MACK CHASEY: “Listen to the economists and stop fighting with each other.”
Larry Hyde agrees. The financial advisor hopes members of Congress can put aside their agendas and focus on what’s good for the nation as a whole.
LARRY HYDE: “It’s important that politicians do not see compromise as failure. That really bothers me. In that they can’t seem to agree because if they agree they’re losing an ideological position which is really sad.”
Hyde says Congress has, so far, thrown a monkey wrench into the machinery that is the American economy. But now that more people are watching as a result, the question is whether it can be removed and put to good use. For KJZZ, I’m Paul Atkinson