State of the Union: In Need of Fiscal Reform

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President Obama has repeatedly expressed interest in reaching a broad, bipartisan agreement that could put the federal budget on a more responsible and sustainable path. With tonight’s State of the Union, he has the opportunity to lay solid groundwork for such an agreement this year by emphasizing the urgent need for one and offering a clear view of what he has in mind.

Last week’s Budget and Economic Outlook report from the Congressional Budget Office offered a timely reminder of the need for sweeping, long-term budget reforms. Under current law, the CBO projects, cumulative deficits over the next decade would total nearly $7 trillion.

Under some alternative assumptions, there could be another $2.5 trillion in deficits over 10 years, with debt held by the public approaching 90 percent of GDP by 2023. And in the decades after that, the aging of the population and rising health care costs are expected to put more and more pressure on the federal budget.

That’s why Obama and members of Congress in both parties must show the courage to move beyond cuts in annual “discretionary” spending – which is already scheduled to decline relative to the economy — and deal with extensive tax and entitlement reforms as well. These changes, which will require bipartisan cooperation and compromise, can be phased in as the economy strengthens.

On Monday the Campaign to Fix the Debt held a “State of the Debt” media briefing to introduce its new Congressional Fiscal Leadership Council, a bipartisan group of former lawmakers who will urge the President and congressional leaders to move forward on “a comprehensive debt deal” in the coming months.

At the briefing, former Sen. Judd Gregg, a Fix the Debt co-chair, disputed the idea that past discretionary cuts and recent tax legislation meant deficit reduction was no longer important. Gregg also serves on The Concord Coalition’s Board of Directors.

“The fact is our debt is still going up at a disproportional rate to what we can afford to pay,” Gregg said. “And if we don’t get it under control fairly soon, and have Congress and the President lead us in this area, then we will end up with a nation which is insolvent. And that’s not fair to our children.”

External links:
The Budget and Economic Outlook: Fiscal Years 2013 to 2023
New CBO Numbers Show Much Unfinished Business
CBO Outlook Testimony
State of the Debt Press Briefing (Fix the Debt)

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