Entitlement Reform: There Is No More Important Issue

by Douglas Holtz-Eakin

I want to draw attention to an open letter on the desirability of entitlement reform. Now, let’s be honest, this is at some level entirely self-indulgent. I organized the letter and am doing everything I can to draw attention to the issue (including this post). 

Why? Because I believe that there is no more important issue (apologies to Libya). The United States is headed toward a third-world debt crisis; Carmen Reinhart (who, along with Ken Rogoff has written the seminal book on the issue) argues that a financial crisis could happen anytime. The U.S. has too much debt (relative to GDP), relies too much on short-term financing, and has non-transparent exposures and contingent liabilities (state-local pensions, state-local health plans, housing exposures, and so forth). These are all characteristics of those who find themselves in deep, deep waters.

Further, the U.S. defense establishment has identified the future debt explosion as a serious national security exposure. Obviously it does the U.S. no good to have to borrow from the Chinese to fund its further existence; does anyone really doubt their desire for global supremacy? More generally, America has been a shining city on the hill for generations in part because it has been willing to defend our values around the globe. In the end, this is dependent upon a large, strong economy.

From these perspectives, controlling the entitlement explosion is the key to avoiding the debt explosion, which is central to sidestepping the American implosion.

So, I am honored to be joined by an illustrious group of bipartisan co-signers asking Congress to make this a priority. Those who signed are acknowledging that this is a crucial moment in our history. 

Importantly, they are not advocating for the specifics of any reform. Thus, I hope that attention to the specifics of what Republicans are rumored to be proposing in the House does not overwhelm the more general truth: Something must be done.  

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