July 28, 2014

Washington Budget Report November 1, 2011

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Super Committee Has Option to ‘Keep It Going’

In addition to the political challenges facing the “super committee” on deficit reduction, it is running short of time. It has a historic opportunity to move beyond partisanship to forge a comprehensive plan for fiscal reform, but under the debt limit legislation approved last summer the panel must issue its recommendations by Nov. 23.

“The way out of this dilemma,” Concord Coalition Executive Director Robert Bixby writes in a blog posting today, “ is to combine their initial deficit reduction package with instructions to the committees of jurisdiction to go further. This would allow the process to go big by keeping it going.”

The committee’s assigned target is to reduce projected deficits over the next decade by a total of $1.5 trillion. But as the Government Accountability Office recently pointed out, even that would still leave the debt on an unsustainable course. So many elected officials and others have urged the super committee to develop recommendations to cut deficits by $3 trillion to $5 trillion instead.

To achieve “a truly sustainable fiscal path,” Bixby writes,  we must reform federal health care programs, Social Security and “the hidden entitlements administered through the tax code.” All of these, he notes, are growing rapidly and driving up federal deficits.

While that’s an extremely ambitious agenda, the super committee can make use of previous work done by various bipartisan groups. That includes the president’s fiscal commission and the Bipartisan Policy Center’s Debt Reduction Task Force. Both of these panels have suggested sweeping reforms that deserve close consideration.

If more time is needed to fully develop a comprehensive plan, Bixby says, the super committee can “instruct the relevant committees of jurisdiction to find additional savings through the regular budget process in 2012. In effect, the super committee could write a ‘super budget resolution’.”

 

Read more with To Go Big, Keep Going

Competing Plans to Cut Future Deficits

Republicans and Democrats on the congressional super committee proposed two widely divergent deficit-reduction plans last week, with each side suggesting that the other had fallen far short of what was required.

With the committee operating largely behind closed doors, many details of the proposals remained uncertain. The Democrat plan was described as cutting projected deficits by $3 trillion over 10 years, with $1.3 trillion of that in increased tax revenue.  The Republicans suggested a plan to reduce the deficits by $2.2 trillion.

On the positive side, both of these proposals would far exceed the committee’s assigned deficit-reduction goal.

House Speaker John Boehner derided the Democratic proposal last week, saying “it’s time for everybody to get serious” and complaining in particular about the idea of a $1.3 trillion increase in tax revenue. He also said Democrats should be prepared to accept larger cuts in Medicaid.

Democrats said the GOP had to show some flexibility on tax increases, at least for Americans with higher incomes. House Minority Leader Nancy Pelosi said it would be unfair to ask older Americans to give up some of their federal benefits and pay higher Medicare premiums if “we are not going to touch a hair on the head of the wealthiest people in our country.”

Some members in both parties, however, expressed interest in the possibility of relying on a different measure of inflation that could result in additional tax revenue and smaller increases in future benefits, including those for Social Security.

Warner, Chambliss to Receive Economic Patriot Award

Senators Saxby Chambliss (R-Ga.) and Mark Warner (D-Va.), who have led the Senate’s “Gang of Six” in pushing for bipartisan fiscal reform, will receive The Concord Coalition’s 2011 Paul E. Tsongas Economic Patriot Award tomorrow night.

Former Sen. Sam Nunn (D-Ga.), a member of Concord’s Board of Directors, will present the award at the organization’s 18th Annual Economic Patriots Dinner in Washington. The event will also include a panel discussion on the nation’s fiscal challenges and possible solutions.

Candy Crowley, CNN’s award-winning chief political correspondent and anchor of State of the Union with Candy Crowley, will serve as moderator. Panel members will be Warner and Chambliss; former Senator Evan Bayh (D-Ind.), now with McGuire Woods, LLP;  former Senator Pete Domenici (R-N.M.), co-chair of the Bipartisan Policy Center’s Debt Reduction Task Force; Comeback America Initiative CEO and former U.S. Comptroller General David Walker, and Concord Coalition Executive Director Robert Bixby.

Elmendorf Reviews Discretionary Spending Issues

Douglas Elmendorf, director of the Congressional Budget Office, last week outlined some of the difficulties facing lawmakers as they weigh further cuts in the “discretionary” spending that Congress approves on an annual basis.

Though defense and non-defense discretionary spending account for less than half of the federal budget, it receives a disproportionately large share of attention during budget-cutting debates.

In testimony to the joint committee on deficit reduction on Wednesday, Elmendorf noted that discretionary spending caps in the Budget Control Act of 2011 would save $778 billion between 2012 and 2021. He pointed to several key factors that would make substantial further reductions in this part of the budget particularly challenging.

Elmendorf said some programs, such as veterans health benefits, are projected in their current form to rise more rapidly than inflation. “Even if budget authority for non-defense programs grew at the rate of inflation,” he cautioned, “that amount of funding would be insufficient to continue some current policies over the 2012–2021 period.”

If spending on some programs is allowed to grow faster than inflation, however, there will be even less room under the caps for other discretionary programs.

Elmendorf also discussed growing pressures for funding in some important areas: “For example, many analysts believe that current national spending on infrastructure is inadequate to provide enough roads, bridges, and other capital assets to maintain the current level of highway services or to fund all of the projects whose benefits exceed their costs.”

The Concord Coalition, while supporting reasonable cuts in discretionary spending, urges elected officials to pursue fiscal reforms throughout the federal budget – including entitlement programs and subsidies for some individuals and businesses that are built into the tax code. Relying on discretionary spending cuts alone will not put the country on a sustainable fiscal track; the math just doesn’t add up.