'No Economically Painless Way Exists to Solve the Problems'

September 20, 1992

The Concord Coalition, a group intended to stimulate discussion of economic issues -- particularly the deficit -- which are not being discussed fully in the election campaign, announced its formation last week. The coalition's leaders are former Sen. Paul E. Tsongas, a Massachusetts Democrat; Sen. Warren B. Rudman, a New Hampshire Republican who is not seeking re-election; and Peter G. Peterson, secretary of commerce in the Nixon administration. Here are excerpts from their statement announcing the new organization:

Today, we are announcing the formation of The Concord Coalition: Citizens for the America's Future.

Our goal is nothing short of revolutionary. We seek to break through the gridlock of politics-as-usual to tell the truth about our economic predicament. Our goal is to save the American economy from its current downward spiral and the huge burdens of debt and deficits being placed on future generations and to restore the economy to its historic trajectory of vigorous productivity growth, savings, investment and rising living standards for all Americans.

We fully realize ours is a daunting, some would say impossible, task, but it is imperative that we try -- and succeed. We intend to do so by telling the truths that are often obscured in our political dialogue, by working with our fellow Americans to shape the hard choices we must face as a nation, by debating those choices with the national interest and future generations uppermost in mind, by empowering citizens who want honesty and real change but do not know where to turn. By doing so, we believe we can also empower political leaders who need the force and support of public opinion to act as they must to solve our problems.

We seek to address the burning issues which political candidates believe are suicidal to address. For example, we seek to call attention to that most politically toxic of all subjects: the exponential growth in recent years of government deficits. Washington's mounting debt is crowding out the investments we, as a nation, need to make in education and training, R&D and new technology development, manufacturing plants and equipment, infrastructure and other key areas. Our future economic competitiveness in the world as well as our security at home depends on such investment. Yet increasingly, we are failing to make the investments so desperately needed for the future.

If we don't act now, by early in the next century we will see the living standards of tomorrow's young workers intolerably squeezed and having to pay perhaps twice as much as today in Social Security and Medicare taxes to finance the benefits promised to today's workers in their retirement. As our children try to meet the challenges of the 21st century, our legacy to them will not be fast rail transportation and fiber optic highways, but the albatross of roughly $150,000 of debt tied around the necks of each household. We may then face not only the ugly contradictions that arise from a society cleaved into "haves" and "have-nots," but the new dangers of a possible inter-generational war as well.

Productivity growth, which once fueled America's rapidly rising living standards is nearly stagment today, largely owing to our failures to make the right national investments. We propose that America should increase its productivity growth by 1 percent a year from its current anemic rate.

Our initial study indicates that America needs to invest $300 to $450 billion per year more than at present in order to regain its role as a high growth, high productivity, high wage economy and to address the growing social crises of, for example, the deepening problems of the underclass.

The surest and fastest way to provide the needed savings is to tackle the federal deficit, a pernicious form of negative savings that now devours between half and two-thirds of all private savings. Compared with our historical record and with our global competitors, we have become the world champions at borrowing and consuming rather than saving and investing. Once among the world's highest savers, our net savings rate has fallen to the bottom of the industrial world. Since 1980, our cumulative deficits have tripled the entire national debt run up over the past two centuries. As a nation, we now invest at a rate amounting to a meager one-third of our performance between 1945 and 1973.

But we also believe that government can and must make the fundamental public investments that the private sector cannot. That is why we lay out an agenda for expanded investment in "human capital" -- in our children and our workers, in research and development, as well as in modern infrastructure investments targeted at productivity goals.

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