Conrad calls for deficit reductionGRAND FORKS — With the growing national debt putting the U.S. on an “unsustainable course,” Sen. Kent Conrad, D-N.D., said Friday that there’s no time to waste for Congress to pass a bipartisan, comprehensive plan to bring down the federal deficit.
By: Ryan Johnson , The Dickinson Press
GRAND FORKS — With the growing national debt putting the U.S. on an “unsustainable course,” Sen. Kent Conrad, D-N.D., said Friday that there’s no time to waste for Congress to pass a bipartisan, comprehensive plan to bring down the federal deficit.
“We have not had a debt this big as a share of our economy since after World War II,” he told the Herald. “We can handle this level of debt, but we’re in the danger zone.”
Conrad announced last month that he won’t seek re-election to the Senate in 2012, saying at the time that he’d rather focus his energy on building support for a deficit reduction plan than campaign for the office he’s held since 1986.
He gave a presentation Wednesday at the Senate Democratic retreat in Charlottesville, Va., on just how dire the situation is, telling colleagues that the country’s gross debt is expected to reach 100 percent of the gross domestic product this year.
Conrad said that’s a big problem because an analysis of 200 years of financial history in 44 countries showed that the “drag” from high levels of debt drastically reduced future economic growth, something that could now happen with the U.S.
“I told my colleagues that I believe that analysis and other reviews that have been done by the chairman of the Federal Reserve, the head of our Congressional Budget Office and others all demonstrate conclusively that we are on an unsustainable course and doing nothing is not an option,” he said.
In order for the U.S. to get a grip on the growing deficit — which is expected to reach $1.5 trillion this year — Conrad said a long-range plan needs to be put in place that will include both tax reforms and cuts in spending.
But it also needs bipartisan support, he said.
Conrad said the plan must deal with tax reform because the current system is “hemorrhaging revenue” through loopholes, credits and deductions. The country’s tax revenue as a share of the economy is at its lowest point in 60 years, he said, and reforming the system could increase revenue while lowering tax rates.
The plan will have to include cuts to domestic and discretionary spending, but he said that makes up only a “small share” of the overall budget.
Still, he said many Americans have the idea that solving the shortfall is as easy as cutting foreign aid — which only makes up about three-quarters of 1 percent of the budget.
“When you’re borrowing 40 cents for every dollar you spend, you could cut foreign aid and still have very little effect on the problem,” he said.
Another misconception, Conrad said, is that simply taxing the wealthy is the solution. But that would require raising the top rates to an unrealistic 84 and 89 percent, he said.
He said the proposal got bipartisan support — five Democrats, five Republicans and one independent voted in favor — but it required the approval of 14 commissioners to guarantee the proposal would get a congressional vote.
“To actually get the job done, it’s going to require at the end of the day 60 senators to stand up and do what has to be done. I hope very much we can because it’s clearly critically important to the country that we do.”
Johnson is a reporter at the Grand Forks Herald, which is owned by Forum Communications Co.