When The Concord Coalition was founded in 1992, the national debt was on a sharp upward trajectory. Yet just five years later, Democratic President Bill Clinton signed legislation passed by a Republican Congress that implemented the first balanced budget in decades. By the time Clinton left the White House, the Congressional Budget Office was projecting a 10-year surplus of over $5 trillion and there was even discussion about whether the national debt could be paid off entirely.
Those forecasts never came to fruition. A combination of economic downturns and irresponsible policy decisions have left the federal government facing a problem today that is similar to 25 years ago: a national debt on the rise with no end in sight. Despite these setbacks, it is important to remember that, for a time, bipartisan policy changes actually succeeded in setting the nation on a responsible fiscal course.
The challenges facing the federal budget today are more difficult than those of the late 90s, primarily due to changing demographics that have already substantially increased the proportion of the retirement-age population receiving benefits from major entitlement programs like Social Security and Medicare. Nonetheless, there is still plenty of evidence that responsible bipartisan policies could correct the nation’s fiscal path.
In 2010, two bipartisan commissions produced plans to stabilize the debt and put it on a downward trajectory as a percentage of the gross domestic product: the National Commission on Fiscal Responsibility and Reform, co-chaired by Erskine Bowles and former senator Alan Simpson, and the Bipartisan Policy Center’s Debt Reduction Task Force, co-chaired by former CBO director Alice Rivlin and former senator Pete Domenici.
The commissions’ plans had several elements in common. Each plan contained a mix of revenue increases and spending cuts. They would have reformed the tax code by reducing marginal rates while closing loopholes, resulting in substantial net revenue increases. Both plans would have reduced spending by slowing the growth of major entitlement programs in ways that protected economically vulnerable beneficiaries. Crucially, funding was preserved for critical investments in the nation’s future like education, infrastructure and scientific research.
In the years since their plans were first published, the Simpson-Bowles and the Rivlin-Domenici commissions have had their proposals updated and rescored a number of times to demonstrate that sustainable fiscal policies with bipartisan support remain credible. All that remains for policymakers to do is muster the political will necessary to make such changes.