Creating A Path To Fiscal Reform
To the Readers’ Forum:
In December 2010, the National Commission on Fiscal Responsibility and Reform released “The Moment of Truth.” The commission, co-chaired by Alan Simpson and Erskine Bowles, was asked to develop a feasible, balanced plan to address federal revenues and expenditures. Their premise was that America was on an unsustainable fiscal path. They documented several reasons for concern.
First, the federal debt had increased dramatically since 2001 (largely due to wars in Afghanistan and Iraq, along with a severe economic downtown). Second, continued increases in the federal deficit were forecast even after the economy recovered from the serious recession that began in 2008. Third, the costs of “entitlement” programs (Medicare, Medicaid, Social Security) continue to increase at a rapid rate, without adequate revenues to pay for expenditures. According to projections detailed in the report, federal revenues in 2025 will be sufficient to pay for these “safety net” programs and interest payments on the federal debt. All other federal programs, from national defense and homeland security to transportation and energy, will require borrowed money to cover budget expenditures.
President Obama asked members of the bipartisan Commission to address two related issues. First, devise a strategy that would bring the federal budget into primary balance (excluding interest costs) by 2015. Second, develop a fiscal plan that would lead to meaningful long-term improvements in the nation’s fiscal health. The Commission proposed a six-part plan to promote fiscal health, economic growth, and protect the most needy people among us. The plan was designed to achieve almost $4 trillion in deficit reduction through 2020; reduce the federal deficit to 2.3% of GDP by 2015; sharply reduce tax rates and cut backdoor spending in the tax code; use 21% as a target for a revenue cap and (eventually) a limit on tax expenditures: create a structure that would ensure lasting Social Security solvency while reducing poverty among the elderly; and stabilize debt with eventual debt reduction to 60% of GDP by 2023 and 40% by 2035.
The “fiscal cliff” scenario that faces American citizens today is a result of the failed attempts by politicians to address revenue and tax expenditure issues in a responsible, timely fashion. Instead, some members of both parties prefer to “practice politics” to further their own agendas and use their political adversaries as scapegoats. A careful reading of the Simpson/Bowles report reveals that a combination of increased revenues and reduced expenditures is the only effective way to address long-term fiscal problems that face all Americans. Instead, the “no new tax” cries of the conservative right are answered by the “no benefit limitations” of the liberal left. Extremists in both parties attack the other side with ideological fervor and fail to participate in responsible conversations that address core issues. We need leaders who will step forward to honestly confront these important issues by explaining alternatives and working together to find long-term solutions. Shared sacrifice will be required…there are no easy solutions. Let’s demand that our political leaders work together to build a stronger America…for our children and our grandchildren.