President Obama said at a news conference on Tuesday that the Greek debt crisis that is rattling the markets is primarily a concern for Europeans and is “not something that should prompt overreactions” in the United States.
But Louisiana Gov. Bobby Jindal, who just stepped into the GOP presidential ring, strongly disagrees. On Monday he warned that the U.S. may be headed down a similar path to a Greek-style debt and financial crisis. “Greece will happen here if we do not change course,” Jindal said in a statement. “Anyone who disagrees with this is a ‘math denier.’”
Jindal claimed Obama’s spending and tax policies had put the country on a path to financial instability, and he warned that a 2016 victory by Democrat Hillary Clinton would “continue and even accelerate” that process.
While key differences between the U.S. and Greek economies mean that direct comparisons such as Jindal’s are probably overblown, the non-partisan Congressional Budget Office and other watchdogs have warned repeatedly that the United States is headed for a long-term debt crisis without a major course correction on spending, entitlements and taxes. Yet while the Republican and Democratic presidential candidates have had plenty to say in recent months about the plight of the middle class, national security and global terrorism, immigration reform, Obamacare, gay marriage and the Confederate flag, little has been said about those debt and deficit warnings. (One notable exception is New Jersey Gov. Chris Christie, who formally announced for president yesterday and who recently unveiled a detailed plan for reining in the cost of federal entitlement programs.)
“It comes up when people ask about it, and people do ask about it,” said Robert Bixby, executive director of the anti-deficit Concord Coalition which along with the Committee for a Responsible Federal Budget and other groups are urging the candidates to speak out more on the subject. “But in terms of candidates initiating a discussion themselves, there hasn’t been a lot of that.”
Largely because of the aging baby boomers and rising health care costs, budget deficits that have declined in recent years are due to resume a steady climb, according to the CBO. By 2040 the federal debt held by the public will rise to a percentage of GDP last seen during the final years of World War II. And at some point, “investors will begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money,” the CBO wrote in early June.
But Bixby sees a silver lining in the threat of Greece defaulting on a roughly $1.8 billion loan repayment to the International Monetary Fund this week and the coincidental uproar in Puerto Rico, where Gov. Alejandro Garcia Padilla said in a televised address that the commonwealth could not pay back at least $73 billion in debt because of profligate spending and borrowing practices.
With international debt problems back in the news, Bixby said, presidential candidates may have no choice but to lay out what they would do to assure that the U.S. doesn’t return to the bad old days of trillion-dollar-a-year budget deficits.
“It’s not that the situations [between the U.S. and Greece and Puerto Rico] are comparable, but I think that the presence of debt crisis in other places inevitably moves it up on the public’s radar screen,” Bixby said in an interview. “It inevitably brings up the question to voters, ‘Well, could that happen to us?’ And it doesn’t really matter if there’s an imminent threat of a debt crisis here or not. Inevitably you start thinking, can that happen here? You know, if you see your neighbor’s house collapsed, you begin wondering, hey, how sound is my foundation?”
Bill Hoagland, a former Republican Senate budget staff director and now vice president of the Bipartisan Policy Center, agreed with Bixby that the Greek and Puerto Rican crises might lead presidential candidates to address fiscal matters. “While we’re lucky that we have a lot of people who still have a lot of faith in this country and are willing to buy our bonds, I think it at least will bring attention to the issue a little bit more,” Hoagland said.
The public’s concern about reducing the deficit has fluctuated widely over the past two decades, according to the Pew Research Center’s annual policy priorities surveys. At the start of the Obama administration in 2009 — with that year’s deficit of $1.4 trillion at nearly 10 percent of GDP — just 53 percent of the public said reducing the budget deficit should be a top priority for Congress and the president. But the share citing deficit reduction as a top priority jumped to 72 percent in 2013 before dropping to 64 percent in January. Terrorism and the economy are currently the public’s top concerns, with three-fourths of Americans citing them as major issues.
“I'm amazed that more candidates haven't already jumped on this,” University of Virginia political scientist Larry J. Sabato said of the evolving international debt crises. “The Tea Party segment of the GOP would be especially interested.”
“It's often said that the general electorate doesn't respond to this issue, but that is not true of the people who vote in Republican primaries,” Sabato added.
For sure, Republicans have had plenty to say about deficits and spending policy this year, but much of it has been argued in the context of the GOP’s long-term balanced budget plan that emerged from Congress this year. The Republican controlled House and Senate passed a budget aimed at wiping out the deficit in the coming decade with deep cuts in spending, the elimination of Obamacare and an overhaul of Medicaid, Medicare and other key entitlement programs. Congressional Republicans remain sorely divided between fiscal hawks determined to preserve tight caps on overall spending and defense hawks who have pressed for a bigger Pentagon budget to bolster military readiness and step up the fight against ISIS and other Middle Eastern terrorists.
Sen. Lindsey Graham (R-S.C.), one of five Republican and Democratic senators running for president, has presented himself on the campaign trail as a hardliner on defense spending best prepared to be the next commander-in-chief, while also acknowledging the need for long-term entitlement and spending reform.
Former Florida Gov. Jeb Bush surprised many in late May when he sharply criticized his brother, former President George W. Bush, for allowing spending and the deficit to get out of control during his administration.
Christie in mid-April sought to position himself as one of the few Republicans willing to take on entitlement reform during a 40-minute speech on the issue in New Hampshire. The two-term New Jersey governor, who is struggling to recover from administrative scandals and budgetary problems, insisted he would not flinch as president in pressing for changes in Social Security, Medicare and Medicaid.
On the Democratic side, frontrunner Hillary Rodham Clinton and Sen. Bernie Sanders of Vermont are both touting liberal spending policies to help the poor and middle class. While both tip their hats to the importance of fiscal discipline, they dismiss concerns about the debt as ill-timed when the economy continues to improve and the deficit continues to shrink as a percentage of the overall economy. Sanders says that if the government is determined to contain the deficit, then wealthy Americans should pay more in taxes to cover needed spending.
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