POTTSTOWN — Maya MacGuineas calls the national debt, an "invisible issue," and yet its potential for damage is very real and almost incalculable.
Like "termites in the basement," the deficit can be hard to see. Like termites, "you can't see them, but they are doing real damage to the entire foundation, in this case of the entire economy," she said.
MacGuineas is the president of the Committee for a Responsible Federal Budget which, according to its website, "is a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact."
And she was in Pottstown Wednesday at the request of U.S. Rep. Madeleine Dean, D-4th Dist., to talk about the deficit, where it's headed and why it's worrisome.
Dean, who serves on the House Financial Services Committee, told the audience of about 30 gathered in the Connections on High meeting room, that after hearing MacGuineas talk about the budget and the deficit, she wanted her to present that information to her constituents.
MacGuineas, who was John McCain's adviser on Social Security issues during his failed bid for the presidency, said that the deficit "is the highest it's ever been relative to the economy, except after World War II."
There are any number of reasons why that's worrisome, she said. Not the least of which is that we depend on debt when the economy goes into recession.
"In a recession, we want debt as a tool to stimulate the economy" as was done after the housing crash of 2008, she said.
But right now, the nation's debt is "twice as high as it was during the last recession."
She added, "it doesn't make sense to have high debt when the economy is strong, and right now, there are a lot of signs there will be another recession, which makes sense, because we've had the longest period of sustained growth we've ever seen."
Also worrisome is that about 40 percent of the nation's debt "is borrowed from foreign lenders," particularly China. "That's a luxury, but it also creates a dependency which is unnerving when there are tensions abroad as there are now," she said.
Just like with your credit card, when the national debt rises, the amount of interest we all pay rises with it.
If current trends continue, in six years Americans will spend more on interest payments than we do on national defense which, at $666 billion a year, is no small number.
And if that figure seems unreal to you, MacGuineas broke it down this way: "the average American taxpayer is paying $2,000 a year on interest on the national debt, and that will only grow if current trends continue."
As for those trends? They're getting worse, said MacGuineas, thanks largely to the tax cut signed by President Trump in 2017.
"I really can't get over how irresponsible that tax cut was," she said. "It should have been offset by tax reform. We give away more than $1 trillion in tax breaks every year. Giving those loopholes a serious haircut could have offset the lost revenue from the tax cuts."
"Congress didn't go through the hard work and do the tax reform" that might have decreased the impact of the tax cuts, said Dean, who was not in office when the legislation was passed.
"I was woefully disappointed with that tax cut," said Dean. "It was utterly irresponsible and only a small percentage of economic growth is even attributable to it."
The last time a member of Congress was in Pottstown to speak in favor of tax cuts was in October of 2017. That was when Republican U.S. Sen. Pat Toomey, appeared at VideoRay, just a block away from where MacGuineas was lambasting the tax cuts he championed.
"Calling reports that the initiative is a '$1.5 trillion tax cut' a 'mischaracterization,' Toomey did not dispute the number in lost revenue to the U.S. Treasury, but said 'that assessment does not take into account what I think is very, very likely to happen, which is a significant increase in economic growth,'" The Mercury reported from his 2017 visit.
Speaking in 2017 in Pottstown, Toomey expressed concern about the deficit. “Yes, I’m very concerned. We have too big a deficit, we have too much debt. But I’m confident that this tax reform is going to reduce the deficit,” he said.
Two years later, MacGuineas said the verdict is in.
"The promise was it would grow the economy so much, it will pay for itself. Well every time you hear a politician tell you something that sounds too good to be true, it is," she said. "The talking points about tax breaks were not what it did."
"Budgeting is trade-offs and if you're going to cut taxes, you either need to also cut spending, or raise other taxes to make up the difference," she said.
"All these things we want," said MacGuineas. "If we can't figure out how to pay for them, they add to the deficit and that undermines the foundation of the entire system."
Among the most significant of those "things we want," are health care and Social Security, topics of some heated questioning Wednesday morning.
"We are at a massive crossroads in our economy," MacGuineas said. "Globalization and technology are changing the world we live in. To succeed, we need to be lifelong learners, we can't just go to school, learn what we need and head out into the world."
However, "we have a social contract and a budget built for the last century," she warned. Chief among those is Social Security which, to be made solvent, will require tax increases and perhaps benefit cuts, she said.
Without making changes, Social Security will have to institute 20 percent benefit cuts in 16 years. "The sooner we make changes, the more gradually they can be phased in," MacGuineas said.
One way to make the system solvent is to broaden the kinds of income that get taxed, and to lift the cap on how much Social Security tax an individual can pay, she said.
Dean said U.S. Rep. John Larson, Democrat of Connecticut and the ranking member on the House Ways and Means Committee, has been working on a plan to save Social Security for the past 10 years.
Called HR 2100, the plan is posted on his website and would, among other things, raise the cap on those making more. "Presently, payroll taxes are not collected on wages over $132,900. This legislation would apply the payroll tax to wages above $400,000. This provision would only affect the top 0.4 percent of wage earners."
By contrast, his plan would lower taxes and costs for low-income workers, according to his website.
Further, Larson's plan would "gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4 percent instead of 6.2 percent today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent."
Dean said Larson's plan has bi-partisan support.
Asked whether she supports "Medicare for all," Dean equivocated.
According to MacGuineas' figures, Medicare, Medicaid and the Affordable Care Act, most often referred to as Obamacare, cost the budget more than $1.1 trillion a year.
Dean said the passage of Obamacare was a hallmark and took years and years of effort, providing health insurance for 20 million people who didn't have it, "but we still have millions of people without health insurance."
Rather than get rid of that legislation, Dean said, Congress should improve it. "I support Medicare for all who want it," Dean said.
"I believe we should expand the ability of people to choose the Medicare option, particularly younger people, to get healthier people into the pool, as well as negotiate drug pricing," Dean said. "But a lot of people like the choices they have now, to get their health insurance through their employer."
Dean said rather than tax cuts for the wealthy, the federal budget should have more money for infrastructure, education and health care.
"We all thought we were supposed to get an infrastructure bill from this president," Dean said, "that would fix our roads and bridges, provide broadband Internet to rural communities and bring rail back to Pottstown."
Said Dean, "Our budgets reveal our priorities. They reveal who we are."