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Tuesday, April 23, 2024

Erskine Bowles: Mounting debt threatens U.S. stability

Former White House Chief of Staff Erskine Bowles was folksy and direct, with a good dose of self-deprecating humor, when he accepted the Uptown Charlotte Rotary Club’s Excellence in Leadership award this week.

The timing of the award, while not intentional, comes as President Joe Biden faces a showdown with Republicans over raising the nation’s $34.1 trillion debt ceiling. Bowles spoke to the club on Feb. 14. The next day, the Congressional Budget Office reported the U.S. Treasury Department would exhaust its ability to pay the country’s bills between July and September unless Congress raises or suspends the debt ceiling.

Erskine Bowles

Bowles made a fortune in investment banking, then was worked for Bill Clinton and served as point person in the 1998 budget negotiations between the Democratic president and the Republican Congress. The result was the first of four balanced budgets.

In contrast, the federal government spent $421 billion more than it has collected in the current fiscal year.

“I think it’s fair to say that we have a dysfunctional government,” says Bowles, 77. “We are addicted to debt. This path that we are on is simply not sustainable. What drives me crazy is that we have no plan to deal with it.”

The Rotarians interrupted his talk with applause more than once. One suggested during a Q&A session that Bowles should consider a run for president in 2024.

“I’m not the person to ask about politics because I have empirical data that shows I’m not very good at it,” Bowles responded, flashing a smile. He made two failed attempts for the U.S. Senate as the Democratic nominee, losing to Elizabeth Dole in 2002 and Richard Burr in 2004.

Bowles remains worried about the national debt. In 2010, he was assigned by President Barack Obama to help control government spending, joining former U.S. Sen. Alan Simpson, a Wyoming Republican, to form an advocacy group called The Campaign to Fix the Debt. Audiences were surprised to see a Republican and Democrat who liked one another, and told the truth about unbalanced budgets, he says.

“It can be done, but it’s not easy,” Bowles says. He reminded the audience of the frosty relationship between Clinton and former U.S. House Speaker Newt Gingrich, a Georgia Republican. The difference then, he says, was that both Clinton and Gingrich believed they needed to produce a balanced budget.

Today, he says, people want to cut spending or raise revenue, as long as someone else feels the pinch.

“If we want to balance this budget, you can’t do it with just revenue, you can’t do it by just cutting spending and you can’t grow your way out of it,” said Bowles. “It’s going to take all three. And to do that you’re going to have to gore everybody’s ox to some extent. We’re all going to have to have skin in the game.”

Threats to default on the nation’s debt would be terrible for the global economy, he added. “That would be crazy. That would be catastrophic,” Bowles said. “Because we in this country are blessed with having the world’s reserve currency, and if we were to default, it would be catastrophic.”

Without a real budget soon, the country will become a “third-rate power,” he said. “If things don’t change, in a few years each dollar coming into the federal government will go for either mandatory spending for Social Security, Medicaid and other entitlements or pay interest on the debt. Money for defense spending, education, homeland security and research will require borrowing.

“Could any of you imagine operating your companies without a long-range plan, without a strategy, without a budget?” Bowles asked.

“We have to have a plan, it has to be real, it has to be realistic and, in my opinion, it has to be bipartisan if you want it to last.”

Bowles led the Small Business Administration under Clinton and was president of the 17-campus UNC System from 2005 to 2010. He compared leading the UNC System to a businessperson running a cemetery. A lot of people are beneath you, but few are listening.

He challenged the Rotarians to help others. He credited the influence of his father, Skipper Bowles, also a successful banker, with pushing him toward community engagement. “All of us have the responsibility to help our fellow man to make this world a better place,” he said.

Bowles’ is focused currently on advocating for more affordable housing. “There are lots of ways outside of elected office to add to the community. All of us in our own way can make a difference.”

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