May 29, 2017

Washington Budget Report: May 10, 2011

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The Concord Coalition is asking young people how they can raise awareness about America's fiscal challenges. The best idea will be featured on our blog. Submit your ideas on our Facebook page, under the "Our Nation's Debt" video.

Talks Start on Raising Debt Limit

With an eye on the need to raise the federal debt limit soon, administration officials and six congressional representatives began deficit-reduction negotiations last week. Some of those involved in the talks, chaired by Vice President Joe Biden, have offered hopeful and conciliatory comments.

Biden described the session on Thursday as a “good, productive first meeting.” The talks were scheduled to resume today, and the President is also scheduled to meet with Senate Democrats and Republicans at separate White House meetings later this week. Because of the meetings, the Senate Budget Committee is unlikely to consider the FY 2012 budget resolution this week.

House Majority Leader Eric Cantor (R-Va.), one of the negotiators, said he thought there were “areas in which we can find some commonality.” Republicans have also been focusing less on their proposal to revamp Medicare, noting intense Democratic opposition to the idea.

The Treasury Department has warned that the government will risk default if the debt limit is not raised by early August. The Concord Coalition has urged Congress to use the debt limit increase as an opportunity to agree on procedural or substantive fiscal reforms.

In a speech in New York last night, House Speaker John Boehner (R-Ohio) said "It's true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process." Boehner called for spending cuts "greater than the accompanying increases in debt authority the president is given" and reaffirmed his position that "tax hikes should be off the table."

As elected officials this year continue to work on broad deficit reduction measures, they should keep everything – including Medicare reform and revenue increases – on the table for discussion. Statements ruling certain options off limits are not responsible.

Civility, Public Engagement Are Needed

Because sweeping government reforms will be politically difficult, the active involvement of the American public is essential. We need a national dialogue about the country’s huge fiscal challenges, the possible options, and the trade-offs among those options.

In a guest column Friday in Politico, David M. Walker, CEO of the Comeback America Initiative, and Robert L. Bixby, executive director of The Concord Coalition, called on President Obama to lead public engagement efforts along the lines of the one mounted by the Clinton administration, Concord and other organizations on Social Security.

Walker and Bixby urged both Obama and congressional Republicans to strive for more than just trying to score points in a partisan debate. Neither party is blameless for our current situation, they note, and neither of them has a monopoly on virtue.

"The issues at stake -- from social insurance reforms to national security funding to domestic investments and comprehensive tax reform -- have profound consequences for the nation’s future . . ." they write. "Civility and compromise are going to be necessary, and the American people must be brought into that process."

Baucus Open to Debt Reduction Trigger

Last week Senate Finance Committee Chairman Max Baucus (D-Mt.) said "A debt reduction trigger could be an important part of passing legislation to reduce our debt and move our economy in a positive direction toward growth and job creation." He spoke at a committee hearing that also included testimony from former Sen. Phil Gramm (R-Tx.), the Government Accountability Office (GAO) and the Center on Budget and Policy Priorities (CBPP).

Reflecting on his experience with the Gramm-Rudman deficit reduction legislation in the 1980s, Gramm argued that stricter enforcement mechanisms should be added if similar legislation is used to address the current fiscal crisis.

Susan Irving, director for federal budget analysis, strategic issues at GAO, said: "To change the fiscal path requires hard decisions about what government will and will not do and how it will be funded." Irving added that "a process may facilitate the debate, but it cannot make the decision."  She concluded that process proposals can be useful in enforcing agreements, but have been less successful in forcing action before there is an agreement on the details.

Paul Van de Water, senior fellow at the CBPP raised concerns about proposals that impose arbitrary limits on spending without addressing revenues.  He cautioned that such an approach could threaten the economic recovery and make deficit reduction less likely.

In an issue brief released last week, The Concord Coalition concluded that for a process proposal to have a meaningful effect on trillion dollar deficits, it should limit exemptions, consider the entire federal budget to be on the table, include realistic targets, and be accompanied by a bipartisan commitment to enforce the targets and support the specific spending and revenue policies necessary to meet them.

Students’ Video Captures Part of National Dialogue

Because their futures are at stake, young Americans need to be engaged in the national dialogue about the rapidly growing federal debt and large unfunded liabilities the U.S. government has for programs like Social Security and Medicare.

T.J Leach and Alex Hall, high school students in Naples, Maine, have set a good example. They are encouraging this dialogue through a new video that features interviews with people in their area about the debt and the country’s related fiscal and economic challenges.

The idea of making the video grew out of an economics class. Alex explains that “we wanted to do something that would actually make more people aware of how this crisis affects all of us.”