Rep. Scott Rigell (R-Va.) recently offered the America First Act, a bill to replace 75 percent of the sequester cuts scheduled under current law with a mix of reforms in mandatory spending and revenue increases from limiting tax expenditures.
Rep. Scott Rigell (R-Va.) recently offered the America First Act, a bill to replace 75 percent of the sequester cuts scheduled under current law with a mix of reforms in mandatory spending and revenue increases from limiting tax expenditures.
In the aftermath of the bipartisan budget agreement, ideas like those in the Rigell plan could serve as models for long-term, bipartisan fiscal reform efforts in Congress.
The Rigell plan proposes a new framework that would achieve substantial deficit reduction while replacing the sequestration-level spending caps that are in place under current law. The plan comes at a time when a number of fiscal experts and lawmakers have concluded that the sequester caps are unrealistically tight.
According to Congressional Budget Office (CBO) estimates, the Rigell bill would save $2.5 trillion over the 10-year budget window. It would do so by implementing a three-to-one mix of spending cuts to revenue increases, making major reforms to Social Security and Medicare to improve their long-term finances.
On the revenue side of the ledger, Rigell would adjust the measure by which tax provisions are indexed to inflation, netting close to $150 billion in additional annual revenue. His plan would also limit the tax benefits of itemized deductions for individuals in the highest tax bracket. These proposals, when partly offset by tax cuts elsewhere in the plan, would raise $200 billion.
When it comes to spending, Rigell’s plan proposes bold reforms that address the major drivers of the nation’s long-term fiscal challenges. He would slow the cost-of-living increases in Social Security for higher-income recipients by using an alternative calculation of inflation that many economists consider more accurate.
The plan offsets the impact of this “chained CPI” calculation on low-income earners in two ways: It would make permanent two expansions to the Earned Income Tax Credit (EITC) that are currently set to expire in 2017, and it would bump up Social Security benefits for the most vulnerable seniors.
Rigell’s plan also nets close to half a trillion dollars over the next 10 years in health savings, drawn primarily from reforms to Medicare such as limiting subsidies for wealthy earners, reducing Medicare payments for bad debts, and bundling payments for post-acute care.
While the short-term focus on the budget has shifted to the need to still pass appropriations bills funding the government for Fiscal 2016, it is important for lawmakers to remember that, when the latest two-year agreement expires, a new president and Congress will have to pull together a new budget deal. Instead of waiting for the last minute to cobble together a compromise, they should seize the opportunity to foster a larger discussion on the fiscal health of the country. Rep. Rigell’s measure should be at the center of that discussion.
As his home-district paper in Hampton Roads, The Virginian Pilot, editorialized on Rigell’s plan, “Rigell, like Sen. Mark Warner, has been remarkably consistent in warning about the nation’s fiscal path into the ditch. Tax increases combined with spending cuts are the only way, they say, to balance the federal books, to begin to trim the nation’s $18 trillion debt.”
A bipartisan recognition of the fiscal realities facing the nation and a concrete plan to confront them should be applauded.
