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Today is October 4, 2022

Editorial

Erskine Bowles outlines critical issues at national co-op meeting

By Michael Callahan

Michael Callahan
Michael Callahan,
Executive Vice President/CEO
EPAs of Mississippi

The National Rural Electric Cooperative Association recently held its annual meeting in New Orleans. The annual meeting is an opportunity for electric cooperative leaders from across the country to meet, share ideas and give direction to our national association on key issues affecting electric co-ops.
    One of the many speakers was Erskine Bowles, who served as Bill Clinton’s chief of staff and served as co-chair of President Obama’s National Commission on Fiscal Responsibility and Reform.
    Mr. Bowles, who receives many invitations to speak, said he was addressing the co-ops because he wanted to make sure his message of how to fix our national crisis got to Main Street America, and he couldn’t think of anyone better to deliver it than electric co-op leaders across the country.
    As I listened to his presentation, I thought his views of the five problems the USA must address were interesting and worth sharing with our readers. Here are his viewpoints:
1. Health care. The USA spends two times as much on health care as other countries but can only muster ratings from 25th to 50th. The new health care law is going to lead to cost shifts within the industry, higher taxes and higher insurance rates.
2. National defense. The USA spends more on defense than the next 17 countries combined! (This includes China, Russia, Great Britain, France and Germany.) We have to quit being the police officer of the world. In fact, Mr. Bowles pointed out the chairman of the Joint Chiefs has identified that our greatest national security threat is not terrorist, but our ever growing deficits. To go to war with China, we would first have to borrow money from them!
3. Tax code. It is stupid, inefficient and makes us globally uncompetitive. The USA netted $1.3 trillion in income taxes last year.
4. Social security. Over the next decade social security will run a $900 billion cash deficit (more paid out than taken in). If some action is not taken quickly, the system will be broke by 2031 or sooner. When FDR started the program, you had to be 65 years of age to draw. The average life expectancy was 62! Today, you can draw at 62 and you likely will live to 79. That is not sustainable.
5. Compound interest. The USA spends $230 billion just on our interest payments, and that’s low in this low-rate environment. If rates were just average, that number would jump to $650 billion. So all you folks with CDs earning zip, now you know why the Federal Reserve is holding rates at zero.
    Mr. Bowles went on to say that we cannot tax our way out of this. Taxes will not make up for the changing demographics of the country nor can they control health care cost. We also cannot “cut” our way out of these problems; such cuts would be devastating to our fragile economy. Mr. Bowles did predict sequestration would occur (he was correct) and that it would cost the country roughly 750,000 jobs in 2013.
     If you would like more information, visit his website at www.fixthedebt.org.

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