WASHINGTON — Reducing the U.S. dependence on foreign oil, imposing carbon taxes, and working with other nations to attack the issue were some ways that experts on global international affairs on Tuesday suggested to address the growing U.S. debt.
“America’s large, and at least for the next few years, rising deficits and large national debt…will at some point have to be addressed seriously,” said Michael Mandelbaum in a panel discussion at the Johns Hopkins University Paul H. Nitze School of Advance International Studies.
The discussion came just one day ahead of the expected presentation of the deficit-reducing plan in Congress by the presidential commission on balancing the U.S. budget.
Mandelbaum, director of the SAIS American Foreign Policy Program, said that while debt reduction requires an equal amount of tax increase and expenditure decrease, he argued that maintaining a strong foreign presence would positively benefit everyone. He pointed to the need to reduce a foreign dependence on oil.
“The U.S. could improve by weakening its adversaries by reducing revenues they receive to make trouble,” Mandelbaum said. “The way to do that is to raise the price of gasoline through a gasoline tax. It’s one way to compensate for the fiscal problems.”
He said that while he realizes this is probably one of the most unpopular policy proposals in the U.S., he hopes to see this policy transpire through a “backdoor” through proposed carbon taxes in current deficit reduction proposals.
Earl Fry, a professor of political science at Brigham Young University, criticized Congress as running away from its debt problems.
Fry said that the U.S. has lost its position on the world stage in terms of losing jobs, citing that real medium household income at the end of 2009 was lower than at the start of 2000. He also added that by the end this decade, the private sector will have lost 3 million fewer jobs in the private sector, especially in manufacturing.
“People will say, hey, this is okay, we can focus from labor to high tech,” Fry said. “We’re losing that game too. We’re running in the red in terms of trade in these areas. The competition is just simply out there. And we can’t be complacent.”
Although it’s easy to claim that the U.S. has fallen short on the economic front, the United States is faring better than other countries, according to Anne Krueger, professor of international economics at SAIS and previous deputy managing director of IMF.
She looked at the debt to GDP ratio across regions like Japan and the Eurozone, and argued that the U.S. is faring relatively better.
However, she said that the most important solution to helping the deficit is international partnerships and multilateral cooperation.
“The international dimension is huge. A cooperative dimension in the long term, medium term, and maybe even the short term, will help everyone,” Krueger said. “I think the missing ingredient…is our failure to recognize a need for multilateral solutions.”