Trillion-dollar deficits call for a serious budget
With unprecedented trillion-dollar deficits projected as far as the eye can see, this country needs a serious budget. Unfortunately, that cannot be said of the one the President just submitted to Congress, which is filled with non-starters and make-believe economics.
But it does at least recognize the need to put our nation’s debt on a downward path, and tucked between the gimmicks are a number of good policy ideas that should receive real consideration.
You could say that it’s too little too late. The president has signed $4.7 trillion of new debt into law over the past three years — an appalling amount of new borrowing on top of what is already built into the budget, and during a period of economic strength where we should have been bringing the debt down.
It also doesn’t help that the budget calls for extending large parts of the Tax Cuts and Jobs Act, piling on another $1.4 trillion in deficits. It’s a tax cut no one asked for at a time when we least need it and can least afford it.
The situation is even direr when you realize that the proposals put forward by the president only scratch the surface. Although the president’s budget claims to cut deficits by $4.6 trillion over the next decade, that’s not enough to undo the fiscal damage of the tax cuts and the spending increases signed in the last three years.
Much of the budget’s improvement comes from assuming economic growth that is 50 percent higher than nearly any other forecast. Stripping away the unrealistic growth and using assumptions from the Congressional Budget Office, debt as a share of GDP would still rise, growing from 80 percent today to 89 percent by 2030.
Looking past the obvious flaws, it’s worth noting that this budget plan includes thoughtful policies to reform Medicare that would reduce the cost of the program for beneficiaries and taxpayers. Despite the doomsday rhetoric, you may have heard, some of these are also bipartisan ideas, such as paying the same amount for similar services whether it’s in a hospital or doctor’s office and slowing the growth of post-acute care payments.
Similar proposals have been in President Obama’s budgets and by some of the leading Democrats on the presidential campaign trail.
The president’s Medicare plan incorporates bipartisan congressional efforts to reduce Medicare Part D costs, lower drug prices, and encourage the use of generic medications. All combined, these proposals could save hundreds of billions of dollars over the next ten years for consumers and the federal budget.
Along with Medicare, the President’s budget includes other proposals that make sense: reducing overlapping and improper payments, reforming student loans, and increasing tax enforcement funding to reduce unpaid taxes.
There is no doubt that this plan is far from perfect and relies too heavily on gimmicks and unrealistic economic growth projections. But something needs to bring both parties in Congress to the table for a long-overdue discussion, and there are serious ideas contained in this plan that merit that sort of attention.
We need both sides to start taking the budgeting process seriously again. We’re running trillion-dollar deficits during an economic expansion and headed for levels of debt only seen right after World War II. Interest on the debt is now the fastest-growing part of the budget.
Does this budget plan rely on the right mix of policies? Nope. We don’t need more pie-in-the-sky economic projections or reckless tax cuts. If you want to criticize, those are great places to start. But we should take legitimate savings ideas seriously.
We can’t continue to borrow and borrow with no end in sight and mortgage our country’s future on everyone’s latest pet project. Making the situation worse not better when our economy is strong enough to endure the transition away from fiscal recklessness is unacceptable. Attempts to even begin getting our fiscal house in order to warrant serious discussion.
Congress is up next. Let’s hope the House and the Senate do their jobs and offer budgets that help improve the dangerous fiscal situation we face.
Maya MacGuineas is the president of the Committee for a Responsible Federal Budget.
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