Lawmakers Divided on Severity of Debt Crisis

WASHINGTON (CN) - As members of Congress button their suits tight in preparation for a looming budget fight, Republican lawmakers Thursday gave a grim assessment of the nation's debt and its future impact on the economy.

Both Republicans and Democrats at a hearing before the Joint Economic Committee on Thursday morning agreed that bipartisan action to draw down the country's $19.5 trillion debt is necessary, but Republicans raised louder alarms than their partisan counterparts about how devastating the rising debt would be.

Congress faces a Sept. 30 deadline to pass a spending package to keep the government open. That deadline, coupled with the nearly two-month recess from which they just returned, leaves precious little time for lawmakers to reach a deal.

Sen. Dan Coats, R-Ind., referred to the problems he said the large national debt would cause as "the day of reckoning."

In his testimony before the committee, former Republican Indiana Gov. and current Purdue University President Mitchell Daniels Jr. blamed the booming debt and Congressional inaction for shrinking public confidence in government and called excessive borrowing "immoral."

"To those still in denial, or even advocating steps that would make our debts even higher, please reconsider," Daniels said. "Your careers may end happily before the reckoning. Your reelections may not be threatened by your inaction. But your consciences should be. You know this, or you should."

Coats held up as a possible solution to the debt a bill he introduced Wednesday that would create a civilian panel to cut back on the debt by recommending reforms to mandatory programs and ways to improve government efficiency.

Modeled after the military panel used to close unnecessary military bases, Coats' proposal received praise from all three witnesses who appeared before the committee.

While Republicans and their sympathetic witnesses spoke of a coming debt-induced Judgment Day, Democrats were more measured in their tone. Though most agreed with Republicans that the government needs to change from its current path, they cautioned against using the national debt as an excuse for not investing in infrastructure and other public spending.

"Excessive austerity in the near term has been pursued in recent years, and it will slow economic growth and make it more difficult to bring down the debt-to-GDP ratio over time," Rep. Carolyn Maloney, D-N.Y., said at the hearing. "Again, we need to address both sides of the equation."

Alice Rivlin, a senior fellow in economic studies at the Brookings Institute, was adamant the debt is a major problem for the country, but made a point of saying it is not a crisis.

"This is not an imminent crisis, it is a problem to be managed," Rivlin said. "And that makes it very difficult for our political process. It would be easier if something terrible were going to happen tomorrow because we don't take steps."

Rivlin warned further inaction on the debt could be a threat to further economic growth but throughout the hearing urged an approach to tackling the debt that takes a wide field of view.

While these spending standoffs are often contentious, Thursday's hearing before the Joint Economic Committee was anything but. Lawmakers at the hearing generally agreed that Congress needs to take action to roll back the debt, even if they varied on the urgency and method, and lamented how difficult it is to convince their colleagues to come together on the issue.

When former Republican Sen. Judd Gregg, who testified before the committee, suggested raising the gas tax to pay for infrastructure spending, Maloney laughed at the prospect of including such a political nonstarter in the temporary spending package Congress is expected to eventually agree to.

While the language used at the hearing showcased how each party approaches the national debt, its substance revealed no easy fix.

Rivlin's testimony epitomized this, as she called for a progressive approach to tax reform coupled with entitlement reform that holds government program as sacred all while advocating for infrastructure spending aimed at boosting economic growth.

She said programs like Social Security and Medicaid warrant a close look for reforms that would help cut down on entitlement spending.

"I don't think you can solve the long-run budget problem the spending side alone," Rivlin said.

Whatever their preferred path forward, the lawmakers bemoaned the lack of serious attention the debt receives both in the halls of Congress and on the campaign trail this election year.

In an interview after the hearing, Coats said this is in part because any lawmaker who dares to take serious action on entitlement reform can expect to be inundated with attack ads from interest groups.

"You mention one effort, as rational as it might be, to address the entitlement program and interest groups immediately flood the airwaves and your mailboxes with political messages saying that the person who raised that needs to be taken out because they're going to take away all your Social Security or you'll never get Medicare, you mention it and you're just blitzed by the groups scaring older people and others with untruth," Coats said.

But to Coats the issue of the debt is one of the most urgent problems the next president could possibly face in office.

"I don't know how many alarm bells have to go off from [the Congressional Budget Office] or from other economists or analysts that look at this to get peoples' attention," Coats said.

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