Peter G. Peterson - Steering Clear: How to Avoid a Debt Crisis and Secure Our Economic Future

F or more than twenty-five years, I have been writing and thinking about a confluence of forces that threatens Americas long-term economic future, including our rapidly aging society, our growing healthcare costs, our vast unfunded entitlement programs, our flawed tax system, and our dysfunctional political system with its myopic inability to compromise or reconcile rigid ideologies. This combination of factors leaves us with the sobering prospect of massive, unsustainable long-term debt that I consider a transcendent threat to future generations.

Yet in spite of repeated short-term fiscal squabbles, including debt limits, sequesters, and government shutdowns, this long-term debt threat remains unaddressed. The drama-filled, economically damaging budget battles of the last few years have focused almost entirely on the near termputting aside the more difficult, but much more important, long-term questions.

Several years ago, I retired from business and considered what I might do that would be both fulfilling and meaningful. It seemed obvious to me that our nations unsustainable, long-term structural fiscal challenges would be a worthy subject and I established a foundation to draw attention toand make progress onthat issue.

Creatively titled the Peter G. Peterson Foundation, this organization would create more awareness of the long-term debt problem, its size, its causes, and its effects. The foundation would also discuss general principles for reform as well as policy proposals themselves. The foundation would be nonpartisan and would not endorse any particular reform proposal. Rather, we would work to educate, engage, and convene a variety of perspectives on this issue.

A good example of this approach was our 201112 Solutions Initiative project. We went to six think tanks from across the ideological and political spectrum, from left to right. To start with, did they agree or disagree that the long-term debt balloon was unsustainable? All six agreed. Did they have their favorite proposal? They all said yes (though they all had different proposals). We then asked if they would be willing to lay out their plan for achieving a sustainable debt level within twenty-five years, and they agreed. We then highlighted the groups findings at our annual Fiscal Summit in Washington, D.C., and distributed their ideas widely, demonstrating that there were many viable paths forward for policymakers.

Now, while its clear that options are available, its also unmistakable that there are very strongly heldand sometimes incompatiblephilosophical views on either side. One view, held by many conservatives, is that we should solve our fiscal challenges with spending cuts alone. The view from the opposite side of the political spectrum holds that cuts to entitlement programs should be off limits, in favor of imposing higher taxes, particularly on the rich. Both approaches are not only extreme in their impact, but they are also politically infeasible.

Putting aside ones ideology, its clear that for any plan to be politically viable for the long term, it must have bipartisan support. Therefore, any durable set of long-term reforms must combine both spending cuts and revenue increases. I further believe that both the revenue and spending reforms should have the heaviest impact on the well offlike me!

Given all this prologue, what am I attempting to do (and not do) with this book? One of the key concepts that I hope to get across in this book is the importance of thinking longer term. As a nation, we are all too focused on this year, or next, and often ignore and delay important decisions that affect the next generation. While many of my critics have labeled me a deficit scold (or worse) who is singularly obsessed with cutting entitlements and immediate austerity, the truth is that I am not principally concerned with this years deficit, or next years or even those over the next ten years. Nor do I favor fiscal austerity in this time of unusual economic distress. And I resolutely believe that we must reform vitally important entitlement programs in a way that retains and strengthens their value for our most vulnerable citizensparticularly as weve seen troubling trends in wage stagnation and disturbing facts about income immobility in recent decades. Rather, my primary concern is the longer term unsustainable path of our debt and the threat that it poses to the American dream.

Lastly, I should explain that this book reflects my personal views, not those of the foundation itself or its staff.

I hope you find this book informative, and that it adds to this critically important conversation about Americas future.