Three progressive organizations, Demos, Economic Policy Institute, and the Century Foundation released a
today. It's a comprehensive report that outlines specific policies that will yield lower deficits and a sustainable debt while preserving essential initiatives and investments critical to an economic recovery. From the report's executive summary:
The most pressing economic problem today is the recession. Among our longer-term problems is the unsustainability of the national budget. Bush-era tax cuts and a shrinking economy have led to significant budget deficits. These deficits are expected to decline as the economy recovers; however, national debt is projected to grow to unsustainable levels in the coming decades as rising health care costs lead to rapidly increasing federal expenditures....
Any realistic solution to the long-term budget outlook must confront the real drivers of the growth of the national debt, namely the rapid rise in health care costs and the lack of adequate revenue. Projected increases in health care costs are not just a threat to the national budget, but also to the viability of American businesses and the health of family budgets. We propose a variety of policies that will reduce the growth in healthcare costs. These changes would not only help reduce the deficit, but could also improve the quality of care and reduce costs for businesses and families.
On the revenue side, changes in tax policy have significantly eroded federal receipts over the past decade. We cannot face national challenges and meet national priorities without adequate funding. Our suggested path demands responsibility by rebalancing the tax code and increasing tax revenue from those most able to pay. The plan also reduces or eliminates tax preferences while maintaining or increasing tax reductions for low- and moderate-income families....
Our suggested budget blueprint achieves lower deficits in the medium term and balances the primary federal budget (the year’s current revenue and spending, not counting interest payments on past debt) in less than a decade. This path recognizes the need to increase revenue while targeting certain areas for reductions in spending; in particular, our proposed path reallocates spending away from the Department of Defense by adopting common sense spending reductions. Finally, the blueprint protects core priorities such as Social Security and health care from economically counterproductive reductions in benefits.
The net impact of the spending and revenue adjustments we put forth in this blueprint will produce the following short- and long-term results:
- Substantial and sustained increased funding for job creation and investments, especially in the near term;
- A budget path that significantly improves the 10-year budget window;
- A transition from a primary deficit to a primary surplus in 2018, and sustainable debt levels by the end of the decade;
- An improvement in the path for public debt in the long term (stabilizing debt as a share of the economy beyond 2025);
- A solid footing for Social Security, Medicare, and Medicaid for the long term;
- A modernized tax code that raises adequate revenue fairly and effciently.
Just as an investment-oriented federal policy helped to create a thriving middle class in the postwar period, an ideology of disinvestment has helped to erode it over the past 30 years. Another path is not only possible, but necessary. Although there are many paths to fiscal balance – some of which include drastic spending and entitlement cuts and the continuation of a regressive tax system – only a path that fosters broadly shared economic growth and security will be sustainable in the long run.
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