OP-ED Fiscal Cliff Fix the Debt

First published in the Greenville News.

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By Henry McMaster, Attorney General South Carolina (Ret.) and Rep. Leon Stavrinakis, (D) – Charleston  

January 7, 2013

We are proud to be Americans.  Ours is an exceptional nation characterized by free markets, innovation, opportunity and individual freedoms.  We are an inspiration to people around the world. The vision of our founding fathers still guides us today.  

We are also proud to be South Carolinians. We have a unique history, strong people, abundant natural resources and the potential for great economic prosperity, including everything from manufacturing to knowledge-based innovation and agriculture. There is no better place to live.

However, all this is threatened by our steadily mounting national debt. The European countries have recently demonstrated the consequences of massive debt. The same thing can happen to us.

The total debt of our national government today stands at $16 trillion, equaling about 73% of the total economic output of every business and individual in the country. Only our debt from World War II was this heavy. (France’s debt is 90%. Greece’s is 163%.) Our debt today averages $51,000 for every man, woman and child in the country, much of it owed to foreign lenders.

Worse, our debt is growing. Left unchecked, estimates are that it will grow to over 100% of our gross domestic product in ten years, and to over 200% by the 2040s.  A growing debt will weaken U.S. competitiveness and bring painful but clearly predictable consequences. These include sky high mortgage rates, more expensive auto loans, difficulties for small businesses in securing capital for expansion, and fewer jobs for workers across the board. Further, because our military power and defense capabilities are based on our economic strength, this debt threatens our national security and our leadership position in the world.  Economic weakness leaves a nation vulnerable.  

Reversing the upward trajectory of our nation’s debt will require long-term efforts to rein in spending while broadening the tax base. This will generate more revenue. Also, lawmakers must reform programs like Medicare and Social Security to ensure their functioning in the future. Bipartisan give and take for the common good will be necessary. And people must know that they will be able to enjoy the fruits of their labors.  The task will be difficult, but it pales in comparison to the ones faced by generations who gave their lives on the battlefield to protect, preserve and defend this country.

The time to act is now. We are headed for a fiscal cliff, a series of indiscriminate spending cuts and sweeping tax increases set by law to take effect automatically on January 1, 2013 if Congress can’t agree on what to do. Observers predict that failure to act could have catastrophic repercussions. For example, the Congressional Budget Office estimates that the U. S. economy would shrink during the first half of 2013 and fall back into a recession.  A Morgan Stanley poll found that about 40% of businesses have already restricted their hiring plans because of this uncertainty, and Moody’s Investor Services has warned that it may downgrade the U.S. credit rating, much like S&P did last year.

In South Carolina, unemployment is 8.6 percent, thirteenth highest in the country. Our poverty rate is also high. We cannot afford to be drawn into a collapsing national economy, especially when our state is beginning to make real progress.

That is why we two are urging South Carolinians of all parties to join together and take a part in meeting this challenge. One way to do so is by joining the CAMPAIGN TO FIX THE DEBT, co-founded by former Senator Allen Simpson (R-WY) and Clinton White House Chief of Staff Erskine Bowles. Its purpose is to encourage policymakers to prioritize and enact into law significant debt reduction initiatives today to secure the stability and blessings of this country for tomorrow.  Please join us and leading CEOs, elected officials from across party lines, and- already – more than 250,000 concerned citizens and sign the petition at www.fixthedebt.org to show your support.

History has seen a nation like ours but once. It took a lot to build it. We must preserve and strengthen it. If we fail, our children and their children may not have a second chance.

Former South Carolina Attorney General Henry McMaster and State Representative Leon Stavrinakis are Co-Chairs of Fix the Debt South Carolina.

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