The Future President Will Need To Wrestle With Debt From The Past

Transcript

DAVID GREENE, HOST:

Now the next president, whoever it is, will come into the Oval Office with big plans for the future of the country, but there will still be leftover bills waiting on the desk, trillions of dollars in federal debt. Just the interest on that could be a serious constraint for the next president. This week, we're looking at the challenges he or she will face on day one. Here's NPR's Scott Horsley.

SCOTT HORSLEY, BYLINE: Danette Kenne is not your typical deficit scold. She's an Iowa college administrator, not some grim-faced killjoy who spends a lot of time muttering about red ink.

DANETTE KENNE: I'm like a lot of people. I have a busy life. The federal budget is something that's out there, but in our day-to-day life doesn't necessarily take focus.

HORSLEY: What brings the government's budget into focus for Kenne is her 9-year-old daughter. She wonders if the debt racked up by the government will leave her daughter with less opportunity than she's had.

KENNE: I think about my parents who grew up during the Depression and what they've lived through in order to make my life better and what I should be doing in order to make my daughter's life better.

HORSLEY: So, Kenne, who works at Drake University in Des Moines, has signed up with the deficit watchdog Concord Coalition in its effort to sound out presidential candidates about how they see the country's fiscal future.

KENNE: Being in Iowa, one of the things we can do is ask questions.

HORSLEY: Kenne and her neighbors will be quizzing presidential hopefuls about the first budget they plan on presenting to Congress. The next president's budget is likely to be a lot less frightening than President Obama's first spending plan. With the Great Recession behind us and the economy on the mend, the federal deficit in 2017 is projected to be only about a third as large as it was in 2009. Even though the tide of red ink is receding, though, the government is still adding to its overall debt. Maya MacGuineas, who heads the Committee for a Responsible Federal Budget, says the bill for that will come due when interest rates begin to rise from their current, rock-bottom level.

MAYA MACGUINEAS: It's kind of like a credit card teaser rate where when rates are really low, it seems really cheap to borrow, but when they shoot up, boy, are you in trouble then. And that's what could happen to this country.

HORSLEY: MacGuineas warns a return to more normal interest rates would add tens of billions of dollars to the government's annual borrowing costs. That's money that wouldn't be available for anything else.

MACGUINEAS: No matter if you're far on the left, if you're far on the right, if you're squarely in the center; there are things that you want the government to be able to do. And if there are no resources, there's really no room in the budget to meet your priorities.

HORSLEY: Last week, the fiscally hawkish Peterson Foundation brought together budget experts from five different Washington think tanks and asked for their advice on how to get control over the government's debt. Michael Peterson, who heads the foundation, says all five managed to come up with an answer.

MICHAEL PETERSON: Good news is that there are many solutions available.

HORSLEY: The various solutions offered by the different think tanks reflect their varying ideologies - liberal, conservative, middle of the road. But there were some similarities. Four of the five think tanks suggested the government should spend more in the coming decades, as the share of the economy, than it does now. And, MacGuineas notes, all five suggested the government should tax more.

MACGUINEAS: Certainly they had different balances between revenues and spending, but they were able to get there. It shows it's doable. The challenge is the political will and the leadership.

HORSLEY: Or maybe there are too many leaders pointing in too many different directions. Because while each of the five think tanks has a road map to reduce the debt, each follows a different path with its own mix of domestic and defense spending and its own formula for raising government revenue. Political leaders are equally divided, and with both parties jockeying for political power, MacGuineas says they've been unwilling to compromise, convinced that if they just hang tough, they won't have to.

MACGUINEAS: It seems like they keep telling themselves the story if only we can win in this next election and we can have the House and the Senate and the White House, all these excuses, then we'll do it. But the then never comes.

HORSLEY: Danette Kenne found more consensus back in Iowa, where she and some of her fellow residents got together for their own exercise in fixing the federal budget. Over the course of a two-hour session, they didn't necessarily agree on a detailed spending and taxing plan, but Kenne says they did find some flexibility and a willingness to keep talking.

KENNE: We tend to hear the lack of consensus and the argument more than we do the agreement. But at the end of that exercise, I heard people say we all agree that we need to figure out a way to make this work.

HORSLEY: That willingness on all sides to give ground is likely to be critical if the next president hopes to make progress on the federal debt. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.