Dennis Seid: Time is now to act on cutting debt

By Dennis Seid/NEMS Daily Journal

“To be rich is glorious.” Ayn Rand? Rand Paul? Paul Ryan?
Nope – Deng Xaioping, the Chinese premier who in 1979 introduced bold economic reforms into the communist country, which had spiraled into a deep morass after the disastrous Cultural Revolution.
More than three decades later, China now is the world’s second-largest country.
It’s still communist, still rife with social and economic ills, but an economic power to be reckoned with.
Which brings us to our country, the good old U.S.A., which has stood atop the economic heap for most of the past century.
Yet there are cracks in the armor, made painfully bare by Standard & Poor’s Rating Service last week.
S&P lowered its outlook for the U.S. long-term debt rating from “stable” to “negative.”
We kept our top-rated AAA rating, but the agency warned that the $1.5 trillion deficit – equal to 11 percent of the gross domestic product, which measures the value of all goods and services produced in a country – was too high.
Too much debt could lead to a weaker currency, faster inflation, higher interest rates and slower economic growth.
To see that in action, turn to Greece, Portugal and Ireland.
On Wednesday, the dollar hit a 21⁄2- year low against the Euro. A weaker dollar also helps send oil prices higher – something we really don’t need.
So, cutting debt should be a priority. Both major political parties in the U.S. agree on that. It’s the method of tackling debt where things quickly diverge.
Of course, the debt run-up can be blamed on both parties.
Two years into his second term, President George W. Bush helped increase the national debt from $5.6 trillion to $8.2 trillion, thanks to the wars in Iraq and Afghanistan and those famous tax cuts. He also championed the financial bailout.
The national debt, under President Barack Obama, has increased to $14 trillion, thanks to the auto bailout, the stimulus plans and those ongoing wars in Iraq and Afghanistan.
Paul Ryan’s bold and controversial proposal to cut the nation’s debt is a start.
Quite simply, we can’t go on living the way we’ve been living.
To cut the massive debt will take drastic measures. Cut entitlements – all entitlements. Let none be spared. Spending at all levels, all departments, must be reduced. Waste and fraud have to be eliminated – not just given lip service.
But cutting only goes so far. More revenue has to be generated, too.
The cumbersome tax code needs to be blown up. Eliminate most, if not all, of the tax breaks. Introduce a tax system where all pay their fair share, whatever “fair” means.
Today, Americans know little about the sacrifices our parents and grandparents made. We’ve learned to cut back, but not like they did.
If we really don’t want our grandchildren to pay for today’s debt, then it’s time to stop talking and start acting.
The U.S. has gotten rich, and it has been glorious. But now it’s time to pay the piper.
Remember, too, that the borrower is slave to the lender.
And the top holder of U.S. debt? China. Something to think about.

Contact business editor Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com.