(1) How would you explain our current fiscal situation to the casual observer?
If current spending and tax policies continue, the United States will have to borrow more and more every year from our own citizens and other countries. Our debts will sky-rocket and we will have to pay out more and more interest on that debt. This mounting debt will either slowly erode our standard of living or cause a more dramatic crisis in which interest rates rise rapidly and the economy spirals downward into another recession.
(2) What would you say is the most striking little-known fact about the debt crisis?
Perhaps the least known fact is that the most challenging aspect of the budget dilemma is not new, nor was it caused by the recession or the two wars we are fighting, although they contribute. The biggest budget challenge is that we have an aging population and rising health care costs. The result is that under current policies, spending for Medicare, Medicaid, and Social Security will rise much faster than the economy is growing and faster than revenues will increase at any feasible tax rates. We have to figure out how to close that growing wedge between spending and revenues. Otherwise, after a few years, we won’t be able to borrow that much money or even pay the interest on our debts.
(3) Do you believe that Congress and the Administration have the will to tackle this significant problem?
I am very hopeful, because the consequences of failure are scary. When I served in the Clinton Administration in the 1990s, we were able, with help from a Republican-led Congress, not only to balance the budget, but to run a significant surplus. This time is harder, but I am hopeful that the Administration and Congress will work together to stabilize the debt. The public is getting the message. Indeed, right now there is a danger that Congress will cut spending too quickly and slow the fragile recovery. It is important not to over-react in the short-term, but to fashion a plan that will begin to slow spending growth and raise adequate revenues on a permanent basis.
(4) What has been most interesting to you about the work of the BPC’s Debt Reduction Task Force?
The most interesting–and gratifying–has been the willingness of Task Force members to work hard at communicating with each other, trying to understand the debt/deficit problem and the options for dealing with it, so that we can find a solution that we all support. We aren’t there yet–but I am very pleased with our progress to date.
(5) As someone who has traveled the world extensively, what locale has been your favorite destination?
I love mountains–the Rockies, the Andes, the Himalayas–and I enjoy learning about cultures that are very different from our own. I am always enthusiastic about the last place I have been. In May of this year, some long-time friends, my husband and I spent more than two weeks in Turkey. Turkey has beautiful mountains and a spectacular coastline, ruins of centuries of different civilizations, fabulous food, and an incredibly diverse and vibrant modern culture. We loved it!