WASHINGTON —
With new
estimates by the Congressional Budget Office (CBO) showing annual budget
deficits through 2005 and the projected 2002-2011 surplus virtually wiped out,
The Concord Coalition warned today that fiscal policy is at a crossroads. The
government’s rapidly deteriorating fiscal outlook poses a serious challenge for
Washington policymakers. Failure to make appropriate adjustments in budget
WASHINGTON —
With new
estimates by the Congressional Budget Office (CBO) showing annual budget
deficits through 2005 and the projected 2002-2011 surplus virtually wiped out,
The Concord Coalition warned today that fiscal policy is at a crossroads. The
government’s rapidly deteriorating fiscal outlook poses a serious challenge for
Washington policymakers. Failure to make appropriate adjustments in budget
policy could turn a manageable problem into a crisis.
“The prospect
of large and growing budget deficits once again threatens the nation’s fiscal
outlook. Congress and President Bush have some hard choices to make when they
return from vacation. We can afford a modest and brief deficit in response to
emergency needs. But we already have too many unfunded entitlement promises
lurking just beyond the 10-year budget window to become complacent with a decade
of deficits. Throwing open the Treasury to all manner of costly election year
promises would be even more irresponsible,” said Robert Bixby, Executive
Director of The Concord Coalition.
While today’s
new numbers from CBO show declining deficits and the return of surpluses by
2006, they are only a baseline. The $1 trillion surplus now projected for
2003-2012 could easily become a $1 trillion dollar deficit if the President’s
$1.7 trillion worth of proposals for higher national security spending and lower
taxes are enacted along with a Medicare prescription drug benefit costing in the
range of $350 to $600 billion as the leading congressional proposals do.
“Politicians
and voters alike need to adjust to a new playing field. Much of the huge
projected surplus turned out to be a mirage. As a result, proposals that once
seemed affordable now add up to perpetual deficits and rising debt. Such
proposals, whether prospective tax cuts or new spending initiatives, must be
reexamined to ensure that we can return to a position of fiscal strength before
the enormous cost of the baby boomers retirement and health care begins to hit
the budget by the end of the decade,” Bixby said.
“Given that
the baseline is probably a best case scenario, it should be clear that we cannot
have it all. The brief era of budget surpluses is over. Congress and the
President need to ensure that a new era of prolonged deficits does not begin,”
Bixby said.
