Opening and Closing Bell on Wall Street
From Christian Vanderbrouk, Managing Director of Global Affairs.
At the World Economic Forum in Davos, Switzerland, business leaders affiliated with the non-partisan Campaign to Fix the Debt gathered to ring the Opening Bell “remotely” to signal to start of trading at the New York Stock Exchange.
Duncan Niederauer, CEO of NYSE Euronext, was joined by Maya MacGuineas, President of the Committee for a Responsible Budget, and executives from NYSE-listed companies to underscore the need for a comprehensive solution to put America’s long-term debt on a sustainable path.
Over the last several months, most public attention has focused on efforts to avoid the end-of-2012 “fiscal cliff” and Congressional haggling over raising the official “debt ceiling.” Meanwhile, the longer-term threat posed by our growing national debt remains unresolved.
According to the Treasury Department, the US government has over $11.5 trillion outstanding in “publicly held debt.” When “intragovernmental” commitments like the Social Security trust fund are included, the figure balloons to more than $16.4 trillion. On a per capita basis, this works out to more than $52,000 per person.
But while the size of the US debt seems large, the more serious concern is its trajectory. The Fix the Debt campaign estimates that the debt will be more than double the size of the US economy by the 2040s. A major driver of this debt, not surprisingly, is the rapid growth in health care spending. To take one official estimate cited by former Obama budget director Peter Orszag: federal spending on health care, which stands at 5.5% of US GDP today, will account for more than 12% of total GDP by 2050.
Harvard economist Kenneth Rogoff has joined those voices urging an end to complacency over the size of America’s debt. In a Financial Times op-ed published yesterday, he argues that the size of the US debt has already reached a level that has been associated with slower economic growth in advanced economies.
The Campaign to Fix the Debt was co-founded by Alan Simpson and Erskine Bowles, the bipartisan Co-Chairs of President Obama’s National Commission on Fiscal Responsibility and Reform. It does not endorse any particular plan or political party, but urges lawmakers to follow a few core principles in order to develop a common-sense solution that reforms and strengthens entitlement programs, raises revenue, and encourages economic growth.