Why Debt Matters….

The Financial Services Committee in Congress is holding a series of hearings on the National Debt and the problems it is causing for the nation.  The first of those hearings will be today at 10am and titled ‘Why Debt Matters’.

The speakers for today’s hearing will be:

  • Mr. David M. Cote, Chairman and Chief Executive Officer, Honeywell International Inc.
  • The Honorable Alice Rivlin, Senior Fellow, Economic Studies, Brookings Institution
  • Dr. Douglas Holtz-Eakin, President, American Action Forum
  • Dr. Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities

Here is some additional information specific to the discussion today from the hearing’s memo to members:

As federal deficits and debt have soared in recent decades, the risks posed by rising and excessive debt shifted suddenly to the foreground of the political debate, leading to the creation of the President’s Fiscal Commission (Simpson-Bowles) and culminating in the passage of the Budget Control Act of 2011. The recent sovereign debt crises experienced by Greece and other highly indebted European countries should serve as a warning to other nations — including the U.S. — about the consequences of a nation spending money it does not have.  As seen in Greece and other nations, a sovereign debt crisis is not an abstract event.  Instead, it leads to difficulty borrowing money, economic upheaval, rising interest rates, dysfunctional financial markets, and an immediate need to sharply raise taxes or cut spending.

 Unfortunately, as deficits have temporarily receded, the urgency among some policy-makers to avert the oncoming spending-driven debt crisis has fallen. For example, a recent AP headline read, “Debts, deficits – once a focus -fade from agenda.” While the short-term budget outlook has improved temporarily from where it stood in 2009 and 2010, the U.S. still faces a long-term fiscal picture that experts from across the political spectrum agree is bleak.  There is also broad consensus that failing to deal with that crisis will leave future generations of Americans with less freedom and opportunity, and result in current generations of Americans living less prosperous lives.

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