A responsible fiscal agenda for Washington

Reporters and editors often liken policy debates to a high-stakes poker game or a gunfight in a dusty street. It lends a touch of dramatic flair to the proceedings and allows pundits to keep score as to who’s winning and who’s losing.

Instead of lining up as combatants in a stand-off over spending priorities and the debt ceiling, Democrats and Republicans in Washington should freshen their approach. They
should ask themselves, “What’s the responsible way to resolve America’s fiscal crisis?”

Americans are tired of the campaign speeches.  They’re tired of dramatic showdowns.  And they’re tired of the gimmicks and one-liners that dominate today’s politics.  This fiscal fight should be about which solution is the responsible one.

For the first time since 2008, the deficit is expected to come in less than $1 trillion this fiscal year, at an estimated $642 billion. Some will argue this means our deficits are shrinking and there’s no longer a need to rein in spending. Let’s not celebrate this new normal.

Adjusted for inflation, the only other deficit higher than the one Washington is expected to run this year – outside of the Obama administration – was in 1943, when the United States was embroiled in a globe-spanning conflict called World War II.  Outside of that era, no other year even comes close.

Second, the Congressional Budget Office’s (CBO) projections show that after a few years of decline, the deficit will begin to grow again thanks to higher than anticipated entitlement and health care spending.  Moreover, even with a lower deficit, our record-high $16.7 trillion national debt will continue to explode.

It was the recognition of the need to get our deficits in check that led to the Budget Control Act of 2011, a bipartisan agreement to limit future spending. But, that was not enough. CBO has since warned repeatedly that piling on to the federal debt will weaken the economy over the long run and increase the risk of a fiscal crisis.

Yet President Obama is already demanding that Washington reverse this agreement he signed and return to business as usual. He essentially declared victory over the deficit in an August 25 speech in New York: “We don't have an urgent deficit crisis,” the president asserted. “The only crisis we have is one that’s manufactured in Washington, and it’s ideological.”

Ultimately, this debate should come down to what Americans believe is the responsible way forward. Polls routinely show that Americans are more concerned Washington is spending too much - rather than not enough. They want Congress to stick by previous cuts - and actually go further. They want their leaders to make the tough decisions needed to ensure long-term prosperity.[AN1]

After years of trillion-dollar deficits and federal spending that still remains near historic highs, we need to change the Washington big-spending mentality that is the reason for yet another debt ceiling showdown.

For a more constructive outcome this time and a more stable future down the road, the president should embrace a more measured and responsible approach to spending, as he seemed to do early in his first term when he hosted a “Fiscal Responsibility Summit” at the White House. 

So the question is, what would a responsible approach to today’s fiscal debate look like? Here are three starting points:

Pay for new spending with corresponding cuts. Any increase in the debt ceiling should be matched by responsible, commonsense spending reductions. There is nothing more irresponsible than simply increasing the debt ceiling every few years with no preconditions or checks on future spending.

Hold the line on bipartisan discretionary spending limits. While some predicted the budget cuts under the sequester that began in March would be disastrous, the fact is that the reductions have been modest and the dire predictions about their effect have been shown to be overblown. The Budget Control Act caps are a key factor in our improved deficit outlook, and the president and Congress should allow these cuts (including those in the defense budget) to stand—and strive to seek out additional savings.

Get real on entitlements. While the president previously recognized the need to restrain spending in Social Security, Medicare and Medicaid, he’s declined to take steps to reform and save these programs. The president and Congress should work to set entitlement spending on an affordable path before these programs consume the budget.

If government overspending were the way to create jobs, the economy would be booming right now. If we want a true recovery, Washington must push forward on the path of spending reform.

That will require leaders in Washington to set spending priorities, show restraint in spending taxpayer dollars and recognize that new spending will require balanced cuts in the budget.

Embracing those principles would show that our leaders are devoted to responsible governance—which would be far preferable to another year of fiscal crisis marked by a series of ongoing standoffs and showdowns.

Washington should skip the posturing and melodrama and focus instead on responsible solutions to the fiscal mess they’ve created. Americans deserve and demand it.

Hamel is executive director of Public Notice, a nonprofit group focused on the economy and how government policy affects Americans’ financial well-being. She served as deputy assistant U.S. trade representative for public and media affairs in President George W. Bush’s administration.