Erskine Bowles is co-chair of the Moment of Truth project, and formerly co-chaired the President's bipartisan National Commission on Fiscal Responsibility and Reform.
With Washington mired in partisan gridlock, presidential candidates promising tax cuts with no specific revenue offsets, and no agreement on reforms and reductions in entitlement spending, Americans are understandably worried about the nation's rising debt. Yet I'm still hopeful we'll address the nation's long-term fiscal problems. I base my optimism on three promising developments:
First, the American economy is coming back. In the December 2010 report of the president's National Commission on Fiscal Responsibility and Reform, we made clear that the first responsibility of any debt-reduction plan is to do nothing to disrupt a very fragile economic recovery. Thus the commission, which I co-chaired, did not recommend immediate big spending cuts or tax increases. Instead we proposed a realistic plan to reduce our deficit by more than $4 trillion over the next decade.
While there are some enormous potential obstacles to continued economic growth, the steady stream of positive reports on the economy and employment is good news for deficit hawks. Growth alone will not solve our long-term fiscal problems, but it will improve the government's current balance sheet. Just as important, it should provide the incentive for political leaders in both parties to focus on the nation's long-term economic future.
Second, we shouldn't let the near-term disappointments of last summer's ugly debt-ceiling debate cloud the more enduring silver lining: Deficit reduction now has the upper hand.
In his effort to reach a grand bargain on debt last August, President Obama faced the politically difficult challenge of persuading members of Congress to extend the debt ceiling, raise taxes on the wealthy, and accept serious entitlement reforms. Ultimately no grand bargain was reached. But Congress passed and the president signed into law more than $1 trillion in spending cuts over the next decade—and it established that defense spending, not just domestic programs, will be cut.
This Budget Control Act of 2011 called for automatic spending cuts of $1.2 trillion over the next decade if the congressional "super committee" failed to reach an agreement, as it did fail. The automatic spending cuts, together with the looming expiration of the Bush tax cuts on Jan. 1, 2013, will finally force Congress and the administration to put up or shut up on deficit spending.
While letting all $3.9 trillion in the Bush tax cuts expire and implementing mindless across-the-board cuts is surely not the smart way to solve our long-term fiscal problems, that threat should be enough to force across the finish line a grand bargain similar to the one our commission proposed.
Finally, the terms of the fiscal debate have fundamentally changed in ways that make lasting progress on the debt far more likely. It was just two years ago that Congress balked at creating a bipartisan fiscal commission. Mr. Obama stepped forward on his own to establish one. After the commission issued its report, "A Moment of Truth," the president used its plan as the framework for his budget negotiations with House Speaker John Boehner.
Subsequently the president has incorporated recommendations from our commission into his budgets including real, specific policies to limit tax expenditures (the various special exemptions, deductions and credits that deprive the government of revenues), slow health-care cost growth, and reduce government spending in other areas of the budget.
In addition, bipartisan groups of U.S. senators and congressman, such as the Senate's "Gang of Six," have put their careers on the line to make proposals to reduce the deficit by over $4 trillion over the next decade. House Budget Committee Chairman Paul Ryan has also come forward with a new plan to stabilize the debt and get it on a downward path as a percentage of the gross domestic product (GDP).
Through it all, the president has boldly told what I believe to be the central truth of debt reduction: America will only turn the corner on the debt if both sides come out of their corners to support a balanced plan that gets rid of unnecessary tax expenditures, and keeps the promise of Social Security and Medicare by putting entitlements on a sustainable path for the long haul.
After a long meeting with Mr. Obama earlier this month, I'm confident that he supports deficit reduction that is generally in line with the recommendations of the bipartisan debt commission. That does not mean that he supports every single thing we recommended, nor do I or any other commissioner who voted yes on the report we issued. But it was apparent to me that the president does support the general framework of the "Simpson-Bowles Plan," and he is willing to do his part to put our fiscal house in order.
Before the year is out, leaders in both parties must reach a principled compromise that stabilizes our debt and puts it on a downward path relative to the economy. This agreement must significantly restrain long-term spending such that the rate of growth in health-care spending is reduced to no more than the rate of growth of GDP plus 1%, and Social Security is made sustainably solvent. This agreement must also overhaul the tax code in a progressive manner to reduce the deficit and improve the nation's economic growth and global competitiveness.
The president has said it himself: The American people can't wait for solutions to the nation's most pressing problems. Considering how much the country supports a real, balanced approach to the debt, the coming election ought to serve as an incentive to act, not an excuse to kick the can down the road.
This text originally appeared as an opinion article in the Wall Street Journal's March 30 edition.