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Two Views on Solving America's Long-Term Fiscal Crisis
For most Americans the debt crisis is both a source of great concern and mystification. It may be surprising to hear Vin Weber, former congressman from Minnesota and Republican strategist, say it's not that complicated at all. "The hardest part is figuring out how to reduce medical or health care spending. It's not like we don't know what we have to do. The hard part of it is the political aspect."
At the Aspen Ideas Festival panel on the debt crisis, MIT economist Simon Johnson and Weber expressed the oft-heard refrain that political division in Congress is a major impediment to reducing the long-term debt and presents a risk to the nation's fiscal health. "There's an understanding that the problem has to be solved," said Weber. "There is a gap between what we have to do to solve the problem and what the public is willing to support."
Fundamental philosophical differences between the two parties must be addressed before the debt crisis can be solved, according to both panelists. Republicans believe the issue is eliminating waste and corruption. Democrats believe it is an issue of raising taxes on the wealthy. "Neither is true," said Weber. "The drivers of the deficit are Medicaid, Social Security. If we don't deal with those, we're not going to solve the problem no matter what revenues we have."
In Johnson's view, the key issue is health care costs, both for government and the private sector. "Health care is what's going to kill us relative to an aging population," he said. The 2008 financial crisis not only increased debt by 50 percent, according to Johnson, largely because of decreased tax revenues, but it exposed the issue of health care, revealing the extent to which the two problems are intertwined.
NPR's Marketplace host Kai Ryssdale, who moderated the discussion, asked how confident Weber and Johnson were that the debt crisis could actually be solved. Weber said he was optimistic it could be done in the next calendar year and invoked Winston Churchill, who famously said, "Americans always do the right thing after they've tried everything else."
Johnson believes America's debt problem has at least temporarily benefited from the current European debt crisis by making the country a relatively safe haven for investment. "We're not in good shape fiscally, but the Europeans are a complete disaster," he said. "As my friend says, we're the cleanest shirt in the laundry basket."