September 21, 2014

Positive Signals on Federal Budget Talks

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

Prospects for constructive budget talks between President Obama and congressional leaders seem to have brightened after an initial meeting at the White House late last week. The signals that came out of that meeting were “very good,” according to Concord Coalition Executive Director Robert L. Bixby.

“There were no lines in the sand, no threats, and no impugning each other’s motives,” Bixby points out in a recent blog post. “Beyond the low bar of politeness, President Obama and his guests appeared to be focused on the right priority -- achieving a long-term fiscal plan and not just a quick fix to the immediate pressure of the ‘fiscal cliff.’ ”  

The fiscal cliff refers to a year-end combination of scheduled tax increases and spending cuts that could throw the U.S. economy back into recession.

Elected officials have been talking about a two-step process, with a down payment on deficit reduction this year while putting together a framework for a long-term deal to be enacted next year, along with a credible back-up mechanism in case Congress fails to act. Concord and many other outside observers have recommended that basic approach.

An apparent consensus on the fundamental point that everything must be on the negotiating table, including revenues and entitlement spending, was also encouraging.

“Whether the promising tone of this start can be maintained through the tough negotiations ahead depends on whether these leaders are truly prepared to make some compromises that will be hard for their respective party bases to swallow,” Bixby writes.

He also says elected officials must keep focused on the big picture and not get derailed by disputes over individual policies – such as tax rates for the highest incomes -- that have “more political significance than economic consequence.”

Obama has also held recent meetings about the budget at the White House with labor leaders and business executives, including some members of Fix The Debt, a campaign aimed at fiscal reform.

Last week the Peter G. Peterson Foundation convened some of the nation’s leading experts on fiscal and economic issues at a Washington forum entitled “Post-Election: the Fiscal Cliff and Beyond.”

Speakers who called for more responsible budget policies included former Federal Reserve chairmen Paul Volcker and Alan Greenspan as well as Alan Simpson and Erskine Bowles, founders of Fix the Debt and co-chairs of the National Commission on Fiscal Responsibility and Reform.

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