The most important message the American people sent to their elected leaders last November was the desire for change. Americans want a new direction and bipartisan cooperation on a number of fronts, including fiscal policy. The Concord Coalition strongly urges you to heed this call — not for political advantage, but as your stewardship responsibility to future generations.
We believe the direction of current fiscal policy is dangerous. Chronic heavy borrowing is gradually weakening our long-term economic strength. Moreover, failure to address the vast unfunded obligations of Social Security and Medicare — $39 trillion at last count — risks a generational conflict in which the children of today’s baby boomers will face the terrible choices of much higher taxes, dramatic cuts in their parents entitlement programs, greatly diminished ability to set their own spending priorities, or unsustainable debt.
Generational fairness requires a major course correction. We recommend that the following four steps be taken immediately: 1. Restore budget caps and pay-as-you-go rules for new spending and tax cuts. These simple rules played a crucial role in bringing the deficit under control in the 1990’s. Renewing them is the most important thing you can do in the short-term to prevent the longterm outlook from getting worse. However, the rules must not be weakened by exempting popular programs or circumventing them when they become inconvenient. The inconvenience is what makes them valuable. 2. Negotiate a bipartisan plan to balance the budget. We are encouraged that the President and the Democratic chairmen of the House and Senate Budget Committees have indicated their support for a balanced budget by 2012. Firm commitment to this goal will force tough choices among the countless proposals for increased spending and new or extended tax cuts that the new Congress will be bombarded with. Balancing the budget would also lower interest payments on the debt, reduce borrowing from abroad and boost national savings. To be meaningful, however, the plan must use realistic cost estimates for military operations, reform of the Alternative Minimum Tax (AMT), non-defense discretionary spending and all other matters. It must also be based on bipartisan negotiations. 3. Include long-term projections in the budget resolution. The impact that your decisions have on our children and grandchildren must be better understood. Yet, the current budget process encourages short-term thinking by focusing on a five or 10-year window. This timeframe is insufficient because it fails to recognize rapidly growing commitments for retirement and health care costs that extend far into the future. Spending and tax policies that may seem “affordable” over 10 years will seem far less so if viewed in the long-term context. 4. Begin a bipartisan process to address long-term fiscal challenges. The structural imbalance between future benefit promises and the revenues projected to pay for them must be addressed head-on. A realistic strategy will require reductions in promised benefits, higher revenues, or a combination of both. Everything must be on the table. Some have suggested a bipartisan commission to make recommendations, while others insist on direct negotiations between Congressional leaders and the administration. Either is acceptable, so long as it begins now and includes a broad mandate to consider all aspects of fiscal policy with no preconditions. The Concord Coalition has been traveling the nation on a “Fiscal Wake-Up Tour” with Comptroller General of the United States David M. Walker and other experts of diverse perspectives. The message from these forums is clear: the American people understand the need for action and, with the right kind of leadership, are prepared to accept sacrifices. But you must convince them that you are serious and that any sacrifice they make will result in a brighter future, not more of the same. Don’t let them down.