June 24, 2017

Washington Budget Report: Nov. 23, 2010

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Bipartisan Panel Offers Credible Plan to Cut Deficits

A bipartisan panel offered a plan last week to curb federal deficits through a mix of spending caps, tax reform, changes in Social Security and Medicare. For a short-term economic boost, the Bipartisan Policy Center’s Debt Reduction Task Force, chaired by Alice Rivlin and Pete Domenici, also suggested a break for workers and employers from the Social Security payroll tax in 2011.

"This is a credible and comprehensive path to a more responsible federal budget,” said Robert L. Bixby, Concord’s executive director and a member of the task force. “It demonstrates that when people with diverse perspectives commit themselves in good faith to negotiating a comprehensive plan to meet our nation’s fiscal challenges, they can do it.” He challenged critics of the group’s proposals to suggest credible alternatives.

Another bipartisan panel, President Obama’s National Commission on Fiscal Responsibility and Reform, will issue its final report Dec. 1.

'Popular' Options Aren’t Enough

As two new bipartisan plans make clear, serious deficit reduction will require highly controversial changes in the federal budget.   But if elected officials reject solid recommendations just because they are unpopular, warns Robert L. Bixby, executive director of The Concord Coalition, “ we might as well fold our tents and wait for the inevitable fiscal crisis because we’ll never eliminate trillion-dollar deficits with ‘popular’ options.”

In a new blog post, Bixby notes that elected officials “have not flocked to embrace” plans put forth by the Bipartisan Policy Center’s Debt Reduction Task Force – of which he is a member -- and the President’s National Commission on Fiscal Responsibility and Reform. And he says it is easy to see why.

“They propose spending cuts in popular programs,” Bixby writes. “They challenge cherished tax breaks and raise revenues in the process. They produce howls of protest from powerful interest groups on the political left and right.”

But he points out that the two plans do one more thing: “They outline plausible paths to a sustainable fiscal policy.” The difficult options they contain are necessary because other, less controversial possibilities  – crackdowns on waste, fraud and abuse, for example  – are simply not enough to get the job done.

GAO Warns About Long-Term Fiscal Outlook (Again)

The Government Accountability Office has issued a new analysis of the long-term fiscal outlook. Under a scenario with realistic assumptions about revenues and spending, GAO projected that by 2020, debt held by the public as a share of GDP would exceed the 109 percent record set after World War II. Also by 2020, about 92 cents of every dollar of federal revenue would be spent entirely on net interest, Social Security, Medicare and Medicaid.

The report is another warning to policymakers that the recommendations of bipartisan commissions should be seriously considered. The projected numbers are bad, but they will be even worse if Congress does not approve a credible plan for long-term fiscal sustainability.

New Budget Director Has No Time to Lose

The Senate has finally approved President Obama's nomination of Jack Lew to head the Office of Management and Budget. Sen. Mary Landrieu had held up the nomination since September because she objected to administration policies on oil and gas drilling.

Having served in this job before, under President Clinton, Lew is certainly capable of hitting the ground running. He will need to do just that because the President's budget is due out in just over two months and will be carefully scrutinized for how it proposes to reduce the deficit.

Read more with Round Two for Jack Lew

A Keen Sense of Urgency on Deficit Reduction

Fiscal experts who spoke at The Concord Coalition’s Economic Patriots Dinner last week warned that rising federal debt could produce serious financial crises earlier than many people think. “We are on the cusp of real danger and real risk,” said Senate Budget Chairman Kent Conrad, who received the Paul E. Tsongas Economic Patriot Award from Concord.

The panel of experts did not “sound particularly optimistic that elected officials would take appropriate action anytime soon,” writes Steve Winn, Concord’s communications director, in a recent blog posting. But he says Conrad, a member of the President’s bipartisan fiscal commission, did offer some hope that it could produce useful recommendations by its Dec. 1 deadline.

In addition to Conrad, others who spoke on the after-dinner panel were Bob Kerrey, Concord’s co-chairman; Peter G. Peterson, Concord’s founding president; Bob Rubin, former U.S. Treasury secretary, and David M. Walker, founding CEO of the Comeback America Initiative.

Long To-Do List Remains for Congress

Congress still has not passed a budget resolution or any of the 12 appropriations bills for the current fiscal year, and its Continuing Resolution expires Dec. 3. Another item of unfinished business: Deciding whether to extend the Bush tax cuts set to expire Dec. 31.

Last week Republicans agreed to ban earmarks during the 112th Congress. Earmarks provide special funding to certain states or congressional districts, often for narrow purposes.  According to the President's fiscal commission, earmarks in FY 2010 totaled about $16 billion -- only a small fraction of the $3.5 trillion budget. Predictably, proposed exemptions for things like transportation infrastructure have quickly appeared.

While any serious attempt to reduce unnecessary spending is a positive step, significant deficit reduction will require much more than a ban on earmarks. If Congress does move forward with a ban, it should not be weakened with gimmicks and exemptions.

Fiscal and Environmental Sustainability

While the nation’s fiscal and environmental challenges are often viewed separately, they share several similarities. Ross Gittell, a University of New Hampshire professor, and Robert L. Bixby, executive director of The Concord Coalition, wrote in a recent op-ed that in both cases, short-term thinking can create long-term problems. Because the benefits of wise policies and strategic thinking are not immediately apparent, their importance is often underplayed in elections.

Fortunately, Gittell and Bixby note, many good solutions exist. Spending cuts, entitlement and tax reform, curbs on health care inflation and tougher budget rules in Congress can improve the fiscal outlook. Effective environmental steps include energy-saving technologies, greater reliance on renewable energy, and reductions in greenhouse gas emissions.

The op-ed appeared in the New Hampshire Union Leader shortly before the university and Concord hosted a day-long conference in which panels of experts emphasized the twin goals of fiscal and environmental sustainability.