A group of prominent economists and experts on the federal budget warned at The Concord Coalition’s 25th Anniversary forum that the government is on an unsustainable fiscal course that puts the country’s future at risk and could place an unfair burden on the next generation.
“It’s a generational challenge,” said Mark A. Weinberger, global chairman and CEO of EY. “As we devote more and more of our budget to interest, entitlements, automatic spending, they’ll keep crowding out every other priority that we want to focus on. It will make it harder to invest in any of the areas that are critical for our future.”
Weinberger, who is also a member of The Concord Coalition’s Board of Directors, and Jason Furman, who served as chairman of the Council of Economic Advisors in the Obama administration, were the featured speakers at the June 29 program — one of several activities this year marking Concord’s 25th anniversary.
In addition to Weinberger and Furman, the program included a panel discussion featuring Stuart M. Butler, a senior fellow in economic studies at The Brookings Institution; Diane Lim, principal economist at The Conference Board; Maya MacGuineas, president of the Committee for a Responsible Federal Budget, and Robert L. Bixby, Concord’s executive director.
Weinberger said the difficult challenges ahead included the rising national debt, mounting federal interest costs, the continuing retirements of 10,000 baby boomers a day, and the fact that so much of the federal budget is “on autopilot,” meaning it does not require annual congressional appropriations.
“We need to act, and we need to act soon,” he said. Among his recommendations: slow the growth of entitlements, improve the health care system, reform the tax code and encourage economic growth.
Furman focused in part on the uncertainty of fiscal and economic projections, reviewing how some projections from years ago had actually turned out. Sounding an upbeat note, he said that there had been some successes in fiscal policy that should be remembered and can perhaps provide encouragement for the future.
Furman laid out what he said was a “feasible path forward on our fiscal imbalances.” A critical step, he said, is to pay for any additional spending plans and future tax cuts.
He also recommended that changes be made that would put Social Security and Medicare on paths to long-term solvency, noting that a variety of options are available.
Kicking off the panel discussion, Bixby discussed several key lessons from Concord’s work on federal budget issues over the last 25 years that could apply to future fiscal reform efforts. Among them: “Fiscal policy remains unsustainable,” and “Popular options, like cutting waste, fraud and abuse or growing our way out of debt, are not enough.”
Butler noted some of the fundamental complexities and disagreements on health care, and suggested that Congress should move slowly in making changes to the health care system. Republicans, he said, may be moving on health care changes “far too quickly for it to be politically palatable to the American people.”
Butler stressed the importance of long-term budget plans that he said could “galvanize support for the necessary changes.” He also said it was important to encourage people with very different opinions to meet and start looking for common ground.
Lim discussed tax issues in light of demographic changes that are putting increased pressure on the federal budget. She said raising government revenue to help deal with this problem is “not that hard to do” without harming the economy, although it is very difficult to do politically.
Tax reform is crucial to reducing federal deficits and the debt, Lim said, but she added that it could also help foster economic growth. She said tax issues mattered to business leaders, but not as much as some other issues such as immigration and regulations.
Pointing to troubling 10-year budget projections, MacGuineas stressed the need for fundamental fiscal reforms:
“Our debt is clearly unsustainable. It’s growing faster than the economy. Interest payments are the fastest-growing part of the budget. We have a problem, whether you’re the majority or the minority.”
MacGuineas also lamented that the “zone of possible agreement” between Democrats and Republicans “seems to be disappearing,” and that “compromise” is increasingly considered “a bad word instead of a good word.”