Congressional Budget Office Director Douglas Elmendorf laid out four simple observations about the federal budget in a recent presentation to the National Association for Business Economics.
First, on the government’s current path the gap between spending and revenues would persist even as economic growth returns to normal. Second, focusing on waste and inefficiency alone cannot stabilize the budget; meaningful changes to popular programs, revenue increases, or both will be necessary.
Third, given current economic conditions, lawmakers must carefully judge how quickly to enact the changes needed to restore sustainability. Finally, Elmendorf notes that a number of policymakers have already released plans that could address the enormous problems.
Although these plans differ in focus – some rely more heavily on spending cuts, others more on revenue – it is encouraging that the goal of fiscal sustainability is now so widely accepted.