The Concord Coalition said today that President Obama's pledge to cut the deficit in half by 2013 is a positive and achievable goal but warned that it would still leave the nation on an unsustainable fiscal path. Concord praised the administration for improving transparency in the budget by using realistic policy projections and specifying several offsets for new initiatives. It warned, however, that spending cuts and tax increases used to fund new initiatives would no longer be available to close the existing long-term budget gap.
"This budget clearly demonstrates that very difficult choices must be made to bring the deficit under control. Even with a strong and rapid economic recovery, a substantial reduction in troops deployed in Iraq and revenue gains from expiring tax cuts, the budget is still deep in red ink in 2013 and the debt is still growing faster than the economy. Any effort to permanently improve the fiscal outlook beyond the 10-year budget window will require more fundamentally addressing the structural causes of our budget imbalance -- demographic change and rising health care costs," said Robert Bixby, executive director of The Concord Coalition.
While the concept of revenue neutrality and pay-as-you-go budgeting is highlighted in the budget, the administration does not apply paygo principles to extension of the 2001 and 2003 tax cuts--a rather large exception. Not paying for these tax cuts leads to an additional $2 trillion in deficits over 10 years, not including additional debt service costs.
Constructively, the budget identifies spending cuts and tax increases--some of the hard choices that will be required to fund the administration's new priorities. Most notably, the budget contains a health care reserve fund designed to enforce a deficit-neutral plan for health care reform. Following through on the offsets required to pay for health care reform will be politically difficult, yet essential, to achieve President Obama's deficit reduction goals. More importantly, additional hard choices regarding health care reform will be necessary to accomplish the administration's essential longer-term goal of "bending the curve" of unsustainable health care costs.
"As the president said in his address to Congress, we have a responsibility not to pass on to our children a level of debt they cannot afford. This budget recognizes that we cannot achieve that goal without substantially changing course from the current fiscal path. Such change can only come through public engagement, shared sacrifice and a bipartisan willingness to consider all options," Bixby said.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.