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Opinion

Commentary: Both parties have tough cuts ahead to trim U.S. debt

The Sacramento Bee

February 16, 2011 12:19 PM

The critiques weren't long in coming after President Barack Obama presented his budget. Both Democrats and Republicans rightly focus on the national debt, which will remain high as a share of the economy for years to come.

Here is the daunting reality: Debt will be the most enduring legacy of the 2007-09 financial crises in the United States and elsewhere across the world.

So how bad is it? Historically, the debt-to-gross-domestic-product ratio in the United States has been below 20 percent. Only during 1945-46 did it top 90 percent.

Obama's budget stabilizes the debt at 75 percent of GDP. We won't hit the post-World War II levels. That's a relief. Under his plan, the debt starts going down as a share of GDP by 2015.

But make no mistake, even getting to that level of stabilization will not be easy. Annual deficits will have to go down substantially. Obama's budget assumes cutting the deficit by more than half within three years. By 2018 under his proposal, it would be whittled from today's $1.6 trillion to $415 billion.

California's two Democratic senators and the House delegation of 34 Democrats and 19 Republicans will have to tread a fine line between not cutting enough (so that debt continues to explode) and cutting too much (stifling economic recovery).

The president has said that health care is the major driver of deficits. That was true before he signed the health care overhaul last March, and it remains true today.

Obama has to explain to the American people what in the new health law will reduce costs – and be honest that it will take a decade to achieve most savings. He also has to be aggressive in seeking even more ways to restrain costs. For their part, House Republicans, who criticize the new health law, have to put realistic options on the table for providing affordable, cost-effective access to health care. What are their proposals? Repeal is not a solution.

To read the complete editorial, visit www.sacbee.com.

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