WASHINGTON — The Concord Coalition said today that the proposed budget deal to increase the debt ceiling, remove some sequester spending cuts and enact changes to entitlement programs is an acceptable compromise to avoid an immediate debt crisis and give appropriators time to fund the government before a potential shutdown in December.
WASHINGTON — The Concord Coalition said today that the proposed budget deal to increase the debt ceiling, remove some sequester spending cuts and enact changes to entitlement programs is an acceptable compromise to avoid an immediate debt crisis and give appropriators time to fund the government before a potential shutdown in December.
“Waiting until the last minute to produce legislation leads to imperfect policy choices, and this budget deal is no exception to that rule,” said Robert L. Bixby, Concord’s executive director. “However, this appears to be an acceptable compromise given the circumstances. While it has some budget gimmicks, it also contains some reforms to Social Security and Medicare that can potentially be built upon. That’s important because these programs are projected to grow the most in the coming decades. With this budget deal, Congress can turn to laying the groundwork for significant fiscal reform once the next president takes office.”
The suspension of the debt limit through March of 2017 would provide welcome reassurance to the financial markets that the United States would not default on any of its financial obligations. As Treasury Secretary Jack Lew has made clear in recent weeks, the government is rapidly running out of “extraordinary measures” to avoid a default. After months of procrastination, Congress now needs to move quickly on the debt limit because it is hard to pinpoint exactly how much longer the extraordinary measures will last.
The suspension would also give elected officials time to make badly needed reforms in the debt limit process. Contrary to widespread belief, the debt limit does not actually restrain federal spending. Nor does it ensure sufficient revenue to avoid further borrowing. The limit is an arbitrary figure, not tied to a meaningful measurement such as economic growth. Congress needs to come up with a better alternative.
With the top-line discretionary spending numbers resolved, congressional appropriators can get to work on their bills to fund the government for the rest of Fiscal 2016 before their December 11 deadline. That funding is already quite late; the fiscal year began Oct. 1.
This process, more closely resembling regular order, would allow for spending decisions to be made thoughtfully in regards to which programs deserve funding increases and which programs deserve cuts. Governing by Continuing Resolution avoids this oversight and is less fiscally responsible.
The proposed agreement achieves some savings through minor reforms to entitlement programs, which are a key driver of projected federal deficits in the coming years as aging baby boomers retire.
Social Security’s Disability Insurance program faces a financial shortfall next year, and the proposed deal would address this with a combination of cost-saving measures and a transfer from the Old Age and Survivors (OASI) Trust Fund to the Disability Insurance (DI) Trust Fund.
In making this transfer, however, lawmakers must keep in mind that the OASI program faces its own financing problems and will require further changes in the years ahead.
Some lawmakers are complaining about how quickly the proposed agreement is moving. It is worth keeping in mind, however, that elected officials have had much of this year to deal with spending plans, the debt limit and other issues. Because this was not done earlier, time is now running short and quick action is needed.
Critics of the agreement have an obligation to propose alternatives that have a reasonable chance of winning bipartisan support. It is insufficient to simple register their disapproval of the deal or to offer alternatives that have no chance of passage.
Presidential candidates should take this opportunity to offer their proposals on both avoiding the need for these last-minute budget deals and on what policy changes they would make in their first budgets to set the nation on a more responsible fiscal course over the long term.
Media Contact: Steve Winn (703) 254-7828 [email protected]
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The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC
