Obama appoints panel to tackle national debt

Official forecasts suggest that without sharp cuts in federal spending or increases in tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country’s ability to educate its children, care for the elderly, or mount a robust national defense.

“This is going to require people of both parties to come together and take a hard look at the growing gap between what the government spends and what the government raises in revenue,’’ President Obama said, standing in the Rose Garden with the leaders of the bipartisan commission. “And it will require that we put politics aside — that we think more about the next generation than the next election. There is simply no other way to do it.’’

Republicans and Democrats alike say the fiscal challenges have been too long ignored. But with the two parties feuding over health care overhaul, Wall Street regulation, and a host of other issues — and the economy still uncertain after a deep recession — there is considerable doubt that they could join hands to fend off a still-distant potential crisis.

“It would take a miracle,’’ said Senate majority whip Richard Durbin, an Illinois Democrat. “But I believe in miracles.’’

Durbin is the highest-ranking member of Congress on the commission, which also includes six presidential appointees. The panel has until Dec. 1 to devise a plan to stop a federal borrowing binge that will only get worse as baby boomers tap into federal retirement programs.

The gulf between the two parties is vast. No budget commission has managed to spur action since 1983. And interest groups are lining up to rally the public against any solution that involves higher taxes or cuts to favored programs — particularly Social Security. Even supporters of the commission are not optimistic: House majority leader Steny Hoyer, a Maryland Democrat and a vocal advocate, said the most he expects is “a good message with regard to the magnitude of the problem.’’

But panel members from both parties say the recent experience of Greece, deeply in debt and begging other countries to help pay its bills, provides a vivid incentive to set aside ideological differences and work together.

At the very least, the Commission on Fiscal Responsibility and Reform will mark the beginning of a national conversation about the role of government in American society. Social Security, Medicare, and Medicaid — popular programs that guarantee income support and universal health coverage to people older than 65 — are growing faster than tax revenue as medical costs rise and the population ages. In the coming decades, the three programs are forecast to dwarf all other spending and force the Treasury to borrow to keep them afloat.

That crisis seemed distant until the recession hit, causing tax collections to tank and federal spending to increase. The public debt is forecast to rise from less than 40 percent of the economy to more than 60 percent by the end of this year, its highest level since 1952. The debt will hit 90 percent by 2020 under Obama’s budget, according to the nonpartisan Congressional Budget Office, a level last seen in the aftermath of World War II.

Meanwhile, the CBO forecasts that interest payments will rise from less than $200 billion a year to more than $900 billion.

Research by economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University has found that public debt in excess of 90 percent of the economy is often the tipping point at which nations lose the confidence of their creditors and tumble into crisis.