October 31, 2014

CONCORD COALITION UPDATES ITS 10 CRITERIA FOR JUDGING BALANCED BUDGET PLANS

WASHINGTON -- The Concord Coalition today released an updated version of its “Ten Criteria for Judging How Budget Plans Measure Up,” first published in 1997.  The criteria were updated in recognition of the fact that Congress is once more confronted with the need to craft a long-term balanced budget plan. Following is an executive summary of the criteria.

  • Are the estimates of future deficits and proposed policy changes realistic? Estimates of current law deficits in the years ahead and savings achievable through proposed policies should not be overly optimistic. Aiming at an overly optimistic target decreases the likelihood that the plan will actually result in a balanced budget.

  • Does the deficit path trend steadily and smoothly downward so that each year's planned deficit is smaller than in the preceding year until a zero deficit is reached? A budget plan that begins by increasing the deficit in the first year or two should be viewed with great suspicion. Actual results are most likely to match a budget plan in the first year or two; after that they are subject to economic and political developments that are difficult to predict.

  • Are major tax cuts and spending increases postponed until a balanced budget has been achieved? Large tax cuts or massive expansions of federal programs increase the deficit and have no place in a plan to bring the budget into balance.

  • Are new or expanded entitlements avoided, or if included, are they held to a minimum and is their cost fully offset? New entitlements create their own demand and generally end up costing more than predicted. A budget plan that proposes such new or expanded entitlements must pay for them fully by offsetting tax increases or reductions in other entitlements.

  • Are proposals to cut discretionary spending explicit and plausible? Recent experience has shown that Congress can limit discretionary appropriations only with extraordinary difficulty. A budget pl should not rest on the assumption that a future Congress and a future President will somehow defy previous experience by enacting heroic domestic spending cuts.

  • Do the numbers add up without resort to "triggers," score-keeping gimmicks, or "time bombs?" Budget tricks should be avoided. Clever accounting does not fool the economy.

  • Does the plan keep the budget in balance in the decades after the baby boom generation ages and entitlement costs explode? A budget that ignores the huge impending fiscal impact of the boomers retirement might eliminate the deficit in the short-term but it will not prove sustainable in the face of the enormous projected fiscal cost of the coming senior boom.

  • Does the plan distribute short-term sacrifice fairly and equitably among Americans of all ages and income groups, expecting the wealthy to do their fair share, and exempting only the very poor? The fruits of a balanced budget will be enjoyed by all. Thus, no economic group, except for the very needy, should be exempt from contributing to eliminating the federal budget deficit, and those who can more readily shoulder the burden should be asked to do so.

  • Can the plan attract substantial bipartisan support? Starkly partisan budget proposals may appeal to true believers and party loyalists, but they are not likely to be enacted and even less likely to be enforced.

  • Does the plan contain credible enforcement mechanisms? Congress will need a set of rules to help enforce any plan it may adopt to rebalance the budget. There are too many claims on too few dollars to declare that formal budgetary restraints are no longer necessary.

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