Where the Money Is

We're entering a new era of austerity. From Wisconsin to Washington, D.C., politicians and thought leaders are focused on doing something about deficits and the debt

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Shaul Schwarz / Reportage by Getty Images for TIME

We're entering a new era of austerity. From Wisconsin to Washington, D.C., politicians and thought leaders are focused on doing something about deficits and the debt. The red ink seems endless: state pension systems underfunded by more than $1 trillion, an annual budget deficit of $1.3 trillion and a public debt of almost $11 trillion. Social Security and Medicare costs will double as the baby boomers retire. And our revenue numbers don't even come close to closing the gaps.

We address the crisis in the states this week with two stories. Reporting from Madison, Wis., editor-at-large Joe Klein explores the fight over public unions, arguing that they've spent decades blocking reform and resisting good governance. TIME contributor Amanda Ripley takes a deeper look at this idea and observes that pretty much every job in America has increased standards of productivity over the past 20 years — except those in the public sector.

So what do we do about all the debt? In Washington, you'd think the debate was whether to cut spending or raise revenue. But that's a false choice. We have to do both, plus we have to streamline the public sector. It's fine to call for cuts in discretionary spending, as House Republicans have. But nondefense discretionary spending amounts to less than 20% of the total budget, most of which is made up of Social Security, defense, Medicare and Medicaid. Cutting discretionary spending won't solve the problem, and gutting the Consumer Financial Protection Bureau and programs like AmeriCorps hurts us in the long run almost as much as unfunded liabilities do. Politicians need to go where the money is: entitlements and defense.