The Danger of Doing Nothing

What’s the gravest threat to U.S. national security? Federal budget deficits, says Admiral Michael Mullen, former chairman of the Joint Chiefs of Staff, because they will consume every dollar of the resources we have. The story is similar for economic competitiveness. Talk to people in education, talk to people doing basic scientific research, talk to communities that need roads and bridges and airports, and they will tell you exactly the same thing: These deficits consume the resources we must invest in keeping America competitive. The good news is that we still have time to deal with the problem, but the longer we put it off, the bigger it will become. We cannot simply grow our way out of it. We could have double-digit economic growth for the next two decades and still have big deficits. We also can’t solve the problem just by raising taxes. That wouldn’t address the fact that demographics have changed and health care costs are increasing at a much faster rate than GDP. And we can’t solve it entirely with cuts. Not to decide is to decide. If we in the business community allow members of Congress to think that doing nothing is OK, then that’s exactly what they’ll do. The solution will require some economic growth. It will require some revenue—which could come from simplifying the tax code, broadening the tax base, and eliminating back-door spending in the form of tax breaks like the home-mortgage interest deduction. We could then bring down tax rates, so that America would be more competitive globally, and still get new revenue to reduce the deficit. Then we have to address entitlement programs: The rate of growth of health care costs in this country should be, at most, one percentage point more than the GDP growth rate. All of us have to make some sacrifices so that we will be able to invest in the future. We also have to see to it that the dollars we’re spending today, in areas like defense and education, are being spent wisely. In a world of limited resources, we have to make choices. So far, though, Washington hasn’t been willing. And the business community is at least partly to blame. Most business leaders will look at a report like that of the group I cochaired, the National Commission on Fiscal Responsibility and Reform (known as Simpson-Bowles), which recommended $3 of spending cuts for every $1 of revenue, and they’ll think it makes sense. It would put our fiscal house in order, bring down costs in areas such as health care that are growing at a rate we can’t afford, and restructure the tax code. They will look at that and say, “This will enable us to compete—I’m for it.” But then they’ll talk to their company’s Washington rep, who will say, “Oh, no, you can’t do that. It may make somebody unhappy—maybe the member of Congress we’re depending on to pass a provision that is important to our company.” And so nothing will happen. Not to decide is to decide. If we in the business community allow members of Congress to think that doing nothing is OK, then that’s exactly what they’ll do. Several other members of Simpson-Bowles and I have formed the CEO Fiscal Reform Council to encourage members of Congress to pull together, not apart. We’re converting the Simpson-Bowles recommendations into legislation that will be introduced in the House and Senate. All of us in business must put aside our individual wish lists and think about what’s really important for the country. If we’re unwilling to do that, then future generations, and I believe our own generation, are going to be in a world of hurt. If America doesn’t step up and fix these problems, we will be a second-rate power before you know it.

The Danger of Doing Nothing

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