WASHINGTON, DC – The Concord Coalition said today that President Biden’s goal of reducing future federal budget deficits by $3.2 trillion over 10 years is a step in the right direction, but falls short of what is needed to prevent the debt from continuing to grow relative to the size of the economy. Moreover, the goal is based on a set of optimistic long-term economic assumptions and unlikely policy outcomes that, if not achieved, would result in far less deficit reduction than projected by the administration.
Concord Coalition executive director Robert L. Bixby stated:
“The president’s budget sets a plausible deficit reduction goal using implausible means for achieving it. Heavy reliance on tax increases to pay for new spending and the absence of any meaningful mandatory spending reductions make the president’s budget “dead on arrival” with Republicans on Capitol Hill. On the other hand, it is equally certain that a deficit reduction plan based exclusively on spending cuts, as many Republicans have insisted on, would be dead on arrival at the White House and in the Senate. There must either be compromise on meaningful deficit reduction options or acquiescence in an unsustainable fiscal path.
With projected baseline deficits totaling $19.5 trillion over the next 10 years, the president’s $3 trillion deficit reduction goal would be a modest improvement, but would still leave the debt growing as a share of GDP.It would require a deficit reduction plan at least twice as large as the President has proposed to stabilize the debt-to-GDP ratio over 10 years at the current level.
Even with the deficit reduction assumed in the budget, interest on the debt grows from $658 billion in 2023 to $1.5 trillion in 2034, higher than it has ever been as a share of the economy.
It is particularly disappointing that the President has not included any specific proposals in the budget to avoid Social Security benefit cuts of 21 percent by 2033 when the program’s combined trust funds will be facing insolvency.
The President deserves credit for advancing a specific plan to bolster the Medicare Part A trust fund, which is also facing near-term insolvency, but his plan partially relies on redirected resources and savings from one place in the budget to another. This kind of ‘reform’ does more to solve a bookkeeping problem than a total resources problem.
The real significance of the budget this year is its framing of the president’s fiscal priorities and the issues he plans to highlight in his re-election campaign, drawing contrasts with Republican proposals. In that regard, as the campaign progresses, we hope to see detailed proposals from his likely opponents.”
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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 Facebook @ConcordCoalition and on Twitter/X: @ConcordC
