The cold, hard statistics behind the nation’s overall financial picture, including health care commitments, are not in dispute. It’s the available fixes no one seems poised to tackle. The U.S. federal debt is the largest in the world, exceeding $15 trillion. Paying the interest on accumulated IOU's is now the fifth largest category in the U.S. budget and has more than doubled in the last 23 years.

The national debt is a brake on economic growth; analysts of all political persuasions agree it is unsustainable. To reduce it, the United States must spend less, borrow less, raise more revenue, or ideally, accomplish all three. The White House and Congress made an unsuccessful stab at tackling debt and deficits last summer, winding up with a downgrade by Standard & Poor’s of the government’s coveted AAA rating.

Stoking the debt are annual deficits -- the gap between spending and revenues -- since 2001, the last time the budget was in balance. The blue-ribbon Simpson-Bowles commission, tasked by President Obama to recommend fixes to the administration and Congress, warned in 2010 that “the moment of truth” had arrived to avert calamity while the country’s retiring baby boomers, rising health care costs, commitments to expansive government programs, and interest obligations on borrowed money all collided.

The budget will not be balanced by the end of the next president’s term, no matter who holds the office. Washington has deferred substantive belt-tightening until 2013 and beyond. “If we wait 10 years,” the Simpson-Bowles report advised, “our economy could shrink by as much as 2 percent, and spending cuts and tax increases needed to plug the hole could nearly double what is needed today. Continued inaction is not a viable option, and not an acceptable course for a responsible government.”

--Alexis Simendinger

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Military, Alliances and U.S. Image Abroad