September 18, 2014

Washington Budget Report: Aug. 28, 2012

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Key Questions for the Candidates

With the Republican National Convention this week and the Democrats’ gathering not far behind, The Concord Coalition has released an updated version of its “Key Questions Voters Should Ask Candidates About Our Nation’s Fiscal Future.”

The questions and accompanying background information are intended to help voters and journalists assess the fiscal rhetoric of candidates for federal office. In updating this material for the fall campaign, Concord urges all of these candidates to provide voters with clear explanations of how they would hold down federal deficits, reform the tax system, repair the entitlement programs and put the country on a more responsible path.

The Key Questions cover topics that include the defense budget, Social Security, health care, tax policies, government waste, recommendations from members of the bipartisan National Commission on Fiscal Responsibility and Reform, the “fiscal cliff” (sharp spending cuts and the expiration of tax cuts scheduled for the end of this year), and possible areas for future bipartisan cooperation.

Attempting to avoid controversy and accountability, political candidates often fall back on vague language that raises as many questions as it answers. Concord’s questions are designed to draw out more specific information for voters to consider.

Many politicians in both parties, for example, are talking about the need for  tax reform. Concord suggests pressing them to specify which tax preferences they would eliminate. In addition, voters need to know whether the candidates would use the resulting revenue for deficit reduction or something else.

Fiscal austerity is another popular talking point, but candidates are often slow to identify any proposals that would actually hit close to home. Voters can prod them for specific examples of changes in government spending or tax policy that they would support even though it would involve some sacrifices for their states or congressional districts.

The Key Questions will be updated periodically to reflect new fiscal estimates and projections.

On Both Sides, Proposed Budgets Fall Short

Both presidential campaigns could do a better job of addressing the tough fiscal choices that face the country in the years ahead. In a recent guest column in the Iowa City Press-Citizen, Sara Imhof, The Concord Coalition’s Midwest field director, reviews some of the strengths and weaknesses of the budget plans that have been put forth this year.

President Obama’s budget, she points out, includes both spending cuts and tax increases. In that sense it puts everything on the table. But it stops short of the structural reforms necessary to keep the federal debt from rising to more unsustainable levels.

As for the budget plan presented earlier this year by Rep. Paul Ryan, chosen by GOP presidential candidate Mitt Romney as his running mate, it promises to reduce the federal debt faster. But the Ryan plan relies on implausible assumptions and fails to specify the tax breaks that would be eliminated to pay for rate reductions.

“So far, both presidential campaigns have missed the mark,” Imhof writes. She urges voters to push candidates this year for credible and comprehensive plans that would reduce projected federal deficits by several trillion dollars in the next decade.

CBO Report Highlights Need for Long-Term Reforms

The Congressional Budget Office (CBO) released new projections last week that show why Washington should commit to long-term fiscal reforms while dealing with some important budget decisions that must be made by the end of this year.

“Once again, CBO’s projections show that if politicians don’t deviate from current policies, the country will continue down an unsustainable path that threatens to weaken the country, jeopardize our standard of living and leave our children and future generations with unmanageable levels of government debt,” said Robert L. Bixby, Concord’s executive director.

The non-partisan budget office said the federal deficit for Fiscal 2012, which ends Sept. 30, would total $1.1 trillion. That would be down slightly from the CBO’s March projection but it would still be the fourth consecutive annual deficit of more than $1 trillion.

The CBO offered two sets of projections for the coming decade. The first assumes that current laws would generally remain in effect, including sharp spending reductions and the expiration of the 2001 and 2003 tax cuts at the end of this calendar year. This “fiscal cliff” would likely cause a recession next year, CBO warned, but would mean lower deficits in future years.

CBO’s “alternative scenario” assumes that elected officials will change certain laws to continue certain current policies.  It is similar to Concord’s Plausible Baseline, which makes certain reasonable assumptions about future congressional action.

Both Concord’s Plausible Baseline and the CBO’s alternative scenario paint a darker long-term picture than the CBO’s first set of projections.

“While it is important to support the economic recovery,” Bixby said, “Washington should also be laying the groundwork for the big fiscal reforms that are necessary to put the federal budget on a more responsible track over the long term. It is possible to do both, but this will require more thoughtful policy-making and greater bipartisanship than we have seen in Washington recently.”