“It is deeply disappointing that our elected officials are once again missing an opportunity to take real action to solve our nation’s long-term fiscal challenges.
“A divided government cannot succeed until elected officials choose to lead the country toward solutions instead of relentlessly defending their own political ideology. Meaningful deficit reduction requires both parties to vote for a plan that does not reflect their partisan litmus tests.
“The basic test of any long-term fiscal plan is whether it stabilizes debt at an affordable level relative to the economy over the long term. The truth is that the supercommittee’s $1.2 trillion goal was only a small down payment towards sustainability, and Congress couldn’t even agree on this initial step.
“Earlier this year, the Congressional Budget Office estimated that U.S. debt will reach a staggering 187% of GDP by 2035. Our projections show that even after sequestration is implemented, debt will still grow to between 134% and 164% of GDP in 2035. Moreover, debt will still reach the same 187% of GDP between 2038 and 2043—just 3 to 8 years later. We would likely reach an economic crisis well before debt reaches such high levels. History suggests that a debt-to-GDP ratio of more than 60-90% can impair economic growth and produce crises.
“The crisis engulfing Europe today is a stark reminder that we must not wait for our own economic and fiscal crisis before we act. Americans and the rest of the world are looking for a signal that the U.S. political leadership is ready, willing and able to put our fiscal house in order for the long term. Until our leaders agree on a framework for stabilizing long-term debt, confidence in America’s economic future will be hobbled.”
About the Peter G. Peterson Foundation
The Peter G. Peterson Foundation is a non-profit, non-partisan organization established by Pete Peterson – businessman, philanthropist, and former U.S. Secretary of Commerce. The Foundation is dedicated to increasing public awareness of the nature and urgency of key long-term fiscal challenges threatening America's future and to accelerating action on them. To address these challenges successfully, we work to bring Americans together to find and implement sensible, long-term solutions that transcend age, party lines and ideological divides in order to achieve real results.