This week on Facing the Future, we talked with Ben Ritz, Vice President of Policy Development at the Progressive Policy Institute (PPI). Ben co-authored a PPI plan released in July called “Paying for Progress: A Pragmatic Blueprint to Cut Costs, Boost Growth & Expand American Opportunity.” The plan would balance the budget over 20 years using a mix of spending cuts, revenue increases, and economic growth. It was part of the Peter G. Peterson Foundation’s Solutions Initiative 2024: Charting a Brighter Future, a series of proposals from seven think tanks to set the debt on a sustainable trajectory. Concord Coalition Chief Economist Steve Robinson joined the conversation.
Ritz described the plan as a “vision for long term fiscal policy. It wasn’t just a deficit reduction exercise to us. We wanted to outline what our ideal fiscal policy looks like. We wanted it to be aspirational, but also economically pragmatic.”
According to Ritz, the 20-year balanced budget goal was chosen for two reasons. “The first is that we know there are going to be a lot of unforeseen challenges. Those challenges are going to have costs associated with them. There are going to be emergencies in the future for which we need to borrow, and so we don’t see balancing the budget as a necessary end, but we believe that putting the budget on a long term path to balance will create fiscal space for that future borrowing to not be problematic. The second reason is that this was an aspirational plan. It’s not politically realistic that our plan is going to be enacted in its entirety anytime soon and so, we wanted to overshoot that goal so that even adopting half of our recommended savings would be enough to stabilize the debt.”
Ritz described the policy choices in the plan as designed to favor investment over consumption and to fully fund the level of investment. “We prioritize public investments that will grow the economy,” he explained, and noted that any necessary tax increases should be done “in the least harmful way.”
“We know that anytime you tax something, you get less of it,” he said. “So we started by raising taxes on things that we actually want less of, like carbon pollution. Raising taxes on emissions would make us have a cleaner economy, be good for growth in the long run, and help reduce the deficit. Beyond that, we prioritize taxing consumption over taxing work and also trying to tax what we call unearned income that you get without having to do any hard work or productive investment to generate it.”
Ritz described a number of proposed changes to both Social Security and Medicare that are designed to lower costs while preserving, or enhancing the programs’ core functions. One innovative change would be in the Social Security benefit calculation.
As Ritz explained, “Right now, Social Security benefits are based on an average of your lifetime earnings and they replace a proportion of those earnings. That proportion declines as your income goes up, and so a higher income person is getting a bigger benefit than somebody who has had a lifetime lower income. A lower percentage of their income is getting replaced, but it’s still the case that we’re giving higher benefits to higher income people. So we propose to change the benefit calculation to be based, not on your lifetime earnings, but how many years you work. Hard work will get rewarded with the same Social Security, regardless of income. That keeps Social Security as an earned benefit, but it makes it more progressive, and it helps us reduce old age poverty, while at the same time making it more affordable for the next generation.”
“If we’re going to give one message to policymakers, it is that we raise the revenue for the government spending that we support,” he said, relating that message to the upcoming debate in 2025 over how to handle expiring provisions of the 2017 Tax Cut and Jobs Act (TCJA).
“The original TCJA was not paid for,” Ritz observed. “It added to the deficit, which was already too big. We had a tax code that was not enough to pay for the promises our government was making, and then we raised even less revenue. And so our message to Congress with this plan is, not only do we think you need to not add to the deficit with any TCJA extension, we actually think you should be doing deficit reduction so that we can afford to pay for these investments.”
Hear more on Facing the Future. Concord Coalition Executive Director Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
