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Analysis: Record US debt hardly dents the campaign

In a  Friday, Aug. 31, 2012, photo, a trader works on the floor of the New York Stock Exchange, in New York. Stocks zigged and zagged Tuesday, Sept. 4, 2012, after reports that the U.S. economy is weakening at a time when China and Europe are also slowing. (Jason Decrow / Fr103966 Ap)
In a Friday, Aug. 31, 2012, photo, a trader works on the floor of the New York Stock Exchange, in New York. Stocks zigged and zagged Tuesday, Sept. 4, 2012, after reports that the U.S. economy is weakening at a time when China and Europe are also slowing. (Jason Decrow / Fr103966 Ap)
Charles Babington Associated Press

CHARLOTTE, N.C. (AP) — Some unpleasant, uninvited guests dropped in on the Democratic convention.

The federal debt hit $16 trillion. U.S. factory activity shrank for a third straight month. And a new poll found President Barack Obama’s “unfavorable” ratings higher than his “favorables” for the first time since February.

The nation’s economic problems and Americans’ discontent are clear. So are Republican Mitt Romney’s opportunities.

A big question hanging over the presidential race’s final two months is this: Will the candidates tell voters the unpleasant truths about what it will take to reverse these trends, especially deficit spending, which worries global markets and dismays many Americans?

Will Romney bulk up his light-on-details platform in an effort to pull ahead of Obama in the polls? Will Obama use Thursday’s acceptance speech to make Americans confront news they don’t want to hear about the long-term prospects for Medicare and Social Security?

Neither seems likely.

Over the past few decades, presidential campaigns have all but dropped appeals such as “Ask what you can do for your country.”

From World War I through the Vietnam War’s height, Congress raised taxes to help pay for such conflicts.

That ended with the Afghanistan and Iraq wars. They were fought far away as major tax cuts from 2001 and 2003 took full effect back home.

Domestic policies took a similar path. Congress, for instance, did not pay for the Medicare prescription drug benefit enacted in 2003.

The nation now borrows 40 cents for every dollar it spends. The new debt level, $16 trillion, was announced Tuesday, as the Democratic convention began.

Millions of Americans say they are worried, even outraged. But Americans also keep electing presidents and lawmakers who pile the debt higher. The nation’s menu is “free lunch,” not “eat your broccoli.”

“The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send” to pay for them, said Douglas Elmendorf, director of the Congressional Budget Office.

That was three years ago. The debt has grown since then.

The irony — some would say hypocrisy — is that both campaigns pay ample lip service to controlling the deficit and debt. Republicans installed a giant “debt clock” in their convention arena in Tampa.

In Tuesday’s Democratic keynote, San Antonio Mayor Julian Castro extolled “a country where everybody pays their fair share, so we can reduce the deficit and create the jobs of the future.”

Whether “everybody” would pay a fair share under Obama’s proposals is much debated. He would extend the Bush-era tax cuts for all households making less than $250,000 a year.

Obama’s 2013 budget proposal called for stimulus-style spending on roads and schools. The plan would have slowed the military’s growth but left the spiraling growth of health care programs for the elderly and poor largely unchecked.

The White House said its plan, which Congress rejected, would have lowered next year’s deficit to $901 billion, compared to the current deficit of about $1.3 trillion.

In speech after speech this week in Charlotte, top Democrats talked about “investing” in programs more than “paying for” services or specifying cuts that would be unpopular.

“If you believe in America, you invest in America,” said Rep. Xavier Becerra, D-Calif. “That’s why it’s not courageous to cut funding for college loans.”

Romney’s tax-and-spending proposals, by virtually every independent analysis, are even more troubling for those hoping to reverse deficit spending. Unlike Obama, he would accelerate military spending growth, restore $716 billion to Medicare, preserve tax cuts for the wealthiest and cut other taxes including those on investment returns.

Romney’s allies at his Tampa, Fla., convention said he would tell “hard truths” about sacrifices Americans must make to restore fiscal order. But he has specified only a sliver of programs, including Amtrak, for cuts. He vows to target other programs if elected.

Meanwhile the Republican Party’s traditional call for low taxes has morphed into an adamant demand for virtually no tax increases, anywhere. “Temporary” tax cuts, in this view, must not be allowed to return to their previous level as scheduled.

This, despite the yawning gap between government revenues and expenses, and the fact that Americans’ federal tax burden, as a share of the total economy, is the lowest since 1950.

Romney joined other GOP candidates last year in saying he would reject deficit-reduction packages even if they cut $10 in spending for every $1 in new tax revenues.

No one pretends it’s easy for politicians to tell voters they must accept fewer services and higher taxes to run a sustainable, responsible government. Powerful interest groups, with skillful lobbyists, fight ferociously to keep federal benefits and tax breaks they enjoy.

Former NBC news anchor Tom Brokaw recently chided the huge AARP lobby for being “in your face” to politicians. He was referring to an AARP television ad that warns lawmakers not to “even think about cutting my Medicare and Social Security benefits.”

Unless something changes soon, “the politics of debt reduction” will become brutal, and not “even the most vulnerable will be spared the budget ax,” writes Peter G. Peterson, a deficit-control advocate who served in the Nixon administration and headed Lehman Brothers.

He urged Obama and Romney to “be upfront with voters. Americans don’t need to be coddled or cocooned from the truth. They’re willing to face facts about the country’s long-term fiscal outlook.”

That may or may not be true. Millions of Americans who wouldn’t dream of ordering and eating a restaurant meal and then refusing to pay for it seem to have a different view of government services.

Thus far, Romney and Obama appear disinclined to challenge those people and test Peterson’s theory.


EDITOR’S NOTE — Charles Babington covers national politics for The Associated Press.

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