July 24, 2014

New Budget Falls Short on Tax and Entitlement Reforms

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

On Monday President Obama unveiled a proposed budget for Fiscal 2012 that failed to aggressively follow up on the recommendations of his bipartisan fiscal commission for sweeping tax and entitlement reforms.

The President’s budget does make some tough choices on domestic and defense appropriations, and appropriately suggests offsets for some additional spending and tax cuts. But far more needs to be done to rein in projected deficits for the next 10 years.

Even if the budget achieves its promised savings, it would lock in a debt-to-GDP ratio that is roughly twice the average over the last 50 years. Interest payments on the federal debt would begin to exceed Medicare costs as early as 2018.

Elected officials in both parties continue to over-focus on proposed cuts in non-security discretionary spending, which only accounts for about an eighth of the federal budget.

This is particularly disappointing after a bipartisan majority on the President’s commission made it clear that the country’s fiscal challenges call for a far more comprehensive approach. The longer we procrastinate, the more difficult and painful the changes will be.