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Citizens lay down law on debt

By Jeanne Sahadi, CNNMoney.com senior writer


NEW YORK (CNNMoney.com) -- When it comes to managing the country's purse strings, Washington gets a failing grade from several groups of citizens and experts across the country.

Those groups, part of the Concord Coalition's Fiscal Stewardship Project, went to Capitol Hill on Monday to deliver a report to their lawmakers detailing their suggestions for how best to address the long-term fiscal storm facing the United States if lawmakers do nothing.

The approaching storm is not a surprise to anyone in Washington.

Indeed, the debt issues threatening to consume the federal budget over time have been in the making for years. The economic crisis of the past year isn't the underlying problem, but it accelerated the timetable lawmakers face for dealing with the country's fiscal problems.

There are many ways to fix what's broken. What's been lacking is the political will.

Some experts believe that all will be much better once the economy recovers. A strong economy means more jobs, more taxable income and more government revenue. And when government has more money coming in, it has to borrow less to pay its bills.

That would be swell. But it's not enough.

To solve the country's fiscal problems, the gross domestic product would need to increase by double digits on average for the next 75 years, according to estimates from the Government Accountability Office. Oh, and that's on an inflation-adjusted basis.

So unless someone finds a serious stash of economic fairy dust, lawmakers are left with three unpopular choices: cut spending, raise taxes and stop making promises the country can't afford.

Instead, they've done just the opposite. They've increased spending and lowered taxes as the country's long-term obligations continue to grow - obligations both to those who buy government debt and to the Medicare and Social Security programs, from which Uncle Sam has been borrowing surplus revenue for years.

Going where politicians fear to tread

That's where the Concord Coalition's citizen-based fiscal advisory councils come in.

The Concord Coalition is a nonpartisan group, founded in 1992, that focuses on educating the public about the federal deficit. Its director, Robert Bixby, was featured in the 2008 movie "I.O.U.S.A."

The Concord councils hail from Atlanta, Milwaukee, Philadelphia and Northern California. They, along with a group of health experts from Iowa and a group of budget policy experts from Northern Virginia, spent the last year studying the country's fiscal challenges and what they believe are the best solutions.

Unlike politicians, the councils were able to deliberate without worrying about getting re-elected. They were outside the partisan cauldron that contorts the statements of even the most level-headed politician.

The councils were not unanimous in their suggestions. But there were some commonalities. Chief among them: disappointment with Washington, and in particular, politicians' use of budget tricks to disguise the true cost of legislation. The Milwaukee council didn't mince words, referring to "an overarching failure in the management of the nation's business."

The councils prefer sweeping reform to half-measures.

"We must examine the policy goals of all taxes and expenditures, change entitlement programs, cut all federal expenses that do not meet our goals and, if necessary, raise taxes," the Northern California council concluded.

And when it comes to facing up to fiscal challenges, they would like lawmakers to make it snappy. "The sooner policymakers get working on solutions, the better," the Philadelphia council wrote.

Here are a few of the most concrete suggestions made by one or more of the councils:

Shore up Social Security's long-term shortfalls: The range of suggestions included raising the retirement age, applying means testing to benefits, raising more revenue and ensuring by a "date certain" that projected revenue is sufficient to cover projected expenses.

Simplify the tax code: The aim should be to reduce taxpayer aggravation, increase voluntary compliance and reduce enforcement costs.

Raise taxes when necessary: The Atlanta council suggested a combination of an income tax and a federal consumption tax. The Northern California council recommended that the additional tax burden "be spread in a way that ensures everyone will contribute at least something in return for the government services they receive."

Make everyone curb growth in health spending: That includes the government, medical providers, insurance companies, lawyers and consumers

Form a bipartisan fiscal commission: The goal is to have a commission willing to make tough recommendations about how to address long-term budgetary shortfalls and put those recommendations up for a yes-or-down vote in Congress.

Think long-term: Lawmakers should consider the costs and effects of a bill beyond the 10-year window they usually use. And they should think about the consequences of their actions on younger generations.

The Atlanta council put it this way: "If Americans don't make the hard decisions now, it will have a devastating impact on the quality of life for our children and grandchildren." To top of page

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