Cover Story: Dealing with the debt

CHARLOTTE, NC (WBTV) - With a deadline just hours away, lawmakers in Washington admit defeat on a deficit deal.  But we talked with two leading figures who have been sounding the deficit alarm for nearly a year.

What they have to say about America's finances will frighten you.

Erskine Bowles and Alan Simpson are the co-chairmen of the president's deficit reduction panel.

They say they've had a plan to deal with the deficit in place for months.  And when they came out with their report a year ago next week it was basically ignored by the White House on down.

How bad is the deficit?  And what should we do?

Alan Simpson, Republican, a respected former U.S. senator from Wyoming.  And Democrat Erskine Bowles of Charlotte.  The former UNC System president and President Clinton's Chief of Staff in the 90s.  Both men sat down with reporters inside UNC Charlotte's Center City campus last week.

The subject - the current effort in Congress to deal with America's debt and the plan they offered one year ago.

"This is not a partisan issue. This is an American issue. This is one we have to solve," said Bowles.

The Simpson-Bowles committee - officially known as The National Commission on Fiscal Responsibility and Reform - was put together by President Obama.

It recommended cutting $4 trillion from the deficit over the next decade through spending cuts and tax hikes.

"It was so specific that when we put it out they laughed," said Simpson.

And the President never embraced the 67-page report.

"We were very very disappointed," said Bowles.  "We spent a lot of time with him and with his economic team up front defining success and the plan that we brought back exceeded all of the hurdles we were given."

Like deficit commission reports before it this one, too, went nowhere.

Now the so-called supercommittee in Congress (which used Simpson-Bowles as a guide) so far has failed approve a deficit-slashing plan.

The stakes are enormous.  Just look at Greece and Italy - two countries that haven't dealt with their debt.

"We're on a trajectory of debt, deficit and interest which matches all of those countries," said Simpson, "except we're a lot bigger.  The trajectory is exactly the same."

So what is a 16-trillion dollar debt?  The so-called Big Bang was 13-billion 600-million years ago, that's one-third of a trillion.  As Simpson put it - America owes 16 billion of those babies.

Every dollar America takes in each year is spent on entitlement programs (Medicare, Medicaid and Social Security) and on interest on the debt.

Everything else the country pays for like defense, homeland security, education, infrastructure, etc. we borrow.

And it borders on the absurd.

Said Bowles:  "We have a treaty with Taiwan.. the U.S. does where we say look we'll defend them if they're attacked by the Chinese. You know, there's a problem with that. The problem is we've got to borrow the money from China to do it. It's like crazy!"

Ask most people what they think's causing our debt to explode most will say waste, fraud and abuse, foreign aid, oil subsidies and congressional perks.

Bowles told us that's only a small part of it.

What's causing the debt to go off the charts are health care and defense (numbers one and two areas most people don't want to touch).  It's also the tax code and compound interest.

The interest on our debt every day is $4.6 billion.

Copyright 2011 WBTV. All rights reserved.