In a Senate Finance Committee hearing last week, the co-chairs of a Bipartisan Policy Center panel discussed proposals to stabilize and eventually reduce the size of the debt compared to the economy.
The testimony came from Pete Domenici, a former Republican senator from New Mexico, and Alice Rivlin, former director of the Congressional Budget Office. In late 2010 their Debt Reduction Task Force produced a bipartisan plan for comprehensive, long-term fiscal reform that included revenue increases as well as spending cuts throughout the federal budget.
“We believe strongly that without fundamental reform in the tax code and in future entitlement benefits, America cannot avoid continuing the steady increase of our federal debt toward 100 percent of GDP in the next decade and 200 percent of GDP a decade later,” Rivlin said. “These are clearly unsustainable levels and normally associated with serious economic and financial difficulties for any nation that strays so far from fiscal responsibility.”
The task force made promising recommendations for a “premium support” plan for Medicare. Under this proposal, recipients would choose whether to remain in traditional Medicare or get support from the government to help purchase private insurance.
“You cannot fix the budget without fixing, in some way, reforming Medicare,” Domenici said. “Roughly 10,000 people are enrolling in Medicare every business day. These are unstoppable trends.”
Robert L. Bixby, executive director of The Concord Coalition, also served on the task force.
Finance Committee Chairman Max Baucus applauded the group’s work. Although he expressed some concern about the Medicare recommendations, he agreed that the nation needed a comprehensive plan to lower deficits over the next 10 years and beyond. “The plan must stabilize and decrease debt held by the public as a percent of GDP,” Baucus said. “The plan should ramp up slowly to allow the recovery to continue.”
External links:
Confronting the Looming Fiscal Crisis (Senate Finance Committee)
Pete Domenici and Alice Rivlin Testify (Bipartisan Policy Center)
