In Indiana, we are proud of Sen. Dan Coats willingness to work across the aisle to solve problems. He has tirelessly promoted the interests of Hoosier farmers, families and small businesses, and he has helped Indiana develop a diverse and healthy economy.
But in the face of the current political schism, can Coats work on a bipartisan compromise to fix the debt?
Some commentators suggest that Congress has done enough already, citing short-term deficit reduction. To be sure, Congress has made considerable progress on deficit reduction the past three years, but lawmakers still havent done anything to confront the long-term drivers of our debt.
In his testimony before the Budget Conference Committee, Congressional Budget Office Director Doug Elmendorf made the argument that long-term burdens will cause the debt trajectory to increase.
Under CBOs extended current-law baseline, federal debt held by the public, which is already quite high by historical standards, is projected to reach 100 percent of GDP 25 years from now, even without accounting for the harmful economic effects of rising debt, Elmendorf said.
Those debt levels are unsustainable – interest payments are projected to reach $1 trillion by 2023, squeezing out future investments. Therefore, it is time for a comprehensive plan for dealing with the long-term trajectory of debt relative to the economy.
To start, lawmakers must replace some of the deep, indiscriminate sequester cuts. The across-the-board cuts to priorities such as education, research and small business loan guarantees have hurt the economy in Indiana amid a fragile economic recovery.
Coats understands the importance of replacing sequestration. In April, he called on President Barack Obama to jump start a bipartisan budget process that would replace some of the cuts with smarter reforms. Obama did not heed the senators call, but the Budget Conference Committee has a real chance now to negotiate a credible sequester replacement. Coats should encourage the conferees to reach an agreement before the committee dissolves on Dec. 13.
But replacing sequestration alone wont be enough. Congress should reduce or eliminate some of the $1.3 trillion in wasteful tax expenditures that weaken our tax code and harm our global competitiveness.
Sens. Max Baucus and Orrin Hatch, chairman and ranking member of the Senate Finance Committee, have put forth a process for considering bipartisan reforms for simplifying our tax code. These reforms could lower tax rates across the board while helping to pay down the debt, which would be a major boon for Indiana taxpayers and businesses.
Coats has demonstrated his willingness to lead on bipartisan tax reform in the Senate. Working with Sen. Ron Wyden, Democrat from Oregon, he introduced the first major bipartisan tax reform legislation in more than 20 years, the Bipartisan Tax Fairness and Simplification Act of 2011. Indianans should urge him to support the Baucus-Hatch efforts, which could be a vehicle for the common sense reforms he proposed with Wyden.
But perhaps most urgently, Coats and his colleagues have an obligation to strengthen Social Security and Medicare and account for the fact that Americans are living longer.
Ask any of Coats constituents in Indiana – it is a foregone conclusion that younger generations of Americans wont receive their Social Security or Medicare benefits. But if we implement real reforms, like asking wealthy seniors to pay more, assessing inflation more accurately or streamlining Medicare delivery, we can improve quality of care and help rein in skyrocketing costs.
A portion of the savings could then be used to protect low-income seniors and vulnerable populations. If designed correctly, these changes could strengthen our entitlement programs to protect them for future generations.
Given the unsustainable trajectory of the national debt relative to the economy, Coats knows that we need a bipartisan compromise. Indiana elected officials have a long history of doing what it takes to solve our most difficult problems.
All Hoosiers should come together to encourage Coats to work across the aisle and help negotiate a comprehensive deficit reduction framework.