The Bipartisan Policy Center's (BPC's) Debt Reduction Task Force, led by former Senate Budget Committee Chairman Pete Domenici and former White House Budget Director Alice Rivlin, proposed a budget enforcement process last week to attempt to rein in growing federal deficits.
Under this Save-As-You-Go (SAVEGO) proposal, Congress would set annual targets to reduce projected deficits enough to place our nation on a fiscally sustainable path. The BPC has recommended stabilizing the debt below 60 percent of GDP.
Under SAVEGO, targets would be set by statute and enforced using a cap on discretionary spending and a cap on health care entitlement programs. Also included is a target for savings from other mandatory programs, reductions in tax expenditures, and other revenue increases. If the targets are not reached, SAVEGO would require automatic spending cuts, reductions in tax expenditures or other revenue increases to address the shortfall.
The most responsible course of action would be for Congress and the President to agree on the specific spending and revenue policies needed to reach fiscal sustainability. If such an agreement is reached, SAVEGO would be useful to enforce it and to ensure that projected savings materialize. If policymakers are unable to agree on the policy details, a budget process proposal such as SAVEGO would be an important first step that could effectively establish a framework for future agreement.