November 2011
Bipartisan Push in House for Expedited Rescission Authority
Today, Reps. Paul Ryan (R-WI) and Chris Van Hollen (D-MD), the two leading members of the House Budget Committee, introduced a bill to give the President expedited rescission authority, a cousin of the line-item veto. The Expedited Line-Item Veto and Rescissions Act would allow the President to submit discretionary spending items to Congress to cancel after spending bills have been passed. If brought to the floor, these cancellations would get an up-or-down vote in Congress. If they are enacted, discretionary spending caps would be adjusted downward, ensuring that all savings go to deficit reduction.
This legislation is very similar to the Reduce Unnecessary Spending Act, which was introduced in both chambers earlier this year by Sens. Carper (D-DE) and McCain (R-AZ) and Rep. Van Hollen. CRFB president Maya MacGuineas also testified on the Act in March, saying that "giving the President a more central role could increase accountability and serve as a deterrent to Members for adding low-priority spending that is likely to be included in a Presidential rescissions package." She also recommended broadening the scope to mandatory spending and tax expenditures where applicable, something that could also be applied to the new bill.
While this authority would not come close to solving our fiscal problems--even if it was used as aggressively as possible--it could help make government spending more efficient.
Photo by Alex Wong/Getty Images North America
Sen. Portman to Propose Corporate Tax Reform Early Next Year
At an American Enterprise Institute event yesterday, Sen. Rob Portman (R-OH) announced that he will unveil a plan to reform the corporate tax code in early 2012. Sen. Portman, a member of the Super Committee, said that he would introduce "pro-growth deficit-neutral corporate tax reform" and that he hoped to get both Republican and Democratic co-sponsors.
According to Sen. Portman's remarks, his proposal would lower the corporate tax rate from 35 percent to 25 percent "primarily by reducing inefficiencies, preferences and exemptions" and move the U.S. to a territorial system. He continued, saying:
"As you know, with the exception of Japan, the United States has the highest corporate tax rates in the developed world — on average a 39.2 percent combined federal and state rate. Over the past 20 years, every one of our major foreign competitors has moved to cut rates. 20 years ago the OECD corporate average rate was 39 percent. Today it is 25 percent. The United States alone has failed to act to make its corporate tax system more competitive, and we are paying for it."
CRFB blogged about corporate tax reform earlier this month. As we stated then, getting the corporate rate down to 25 percent will not be easy -- it would require the removal of basically all the existing tax expenditures in the corporate tax code. Corporate tax reform that lowers rates and broadens the base could provide an important economic boost for the U.S. while making the tax code simpler and easier to comply with.
It's important to remember, however, that while giving the economy a boost is important, such measures should also help to reduce deficits and debt. Incorporated in with entitlement reforms and changes to the individual tax code as well, corporate tax reform that is (at the very least) revenue-neutral could help bring us to solid fiscal ground. We look forward to learning the details of Sen. Portman's proposal.
Paying for Any Payroll Tax Cuts
Later this week, Senate majority leader Harry Reid is expected to hold a vote on the two largest components of President Obama’s jobs bill, totaling $250 billion of the $450 billion proposal. These measures, as proposed in the President's jobs package, would extend 2011’s temporary Social Security payroll tax cut of 2 percent into 2012, and expand the amount of the cut to half of the 6.2 percent tax for both employees and the first $5 million in payroll costs for employers. In 2011, general revenue transfers from the Treasury to the Social Security trust funds made up for the reduced Social Security revenues, but increased the deficit nonetheless.
These payroll tax cut measures would cost about $250 billion over ten years, and over $300 billion including interest costs. President Obama’s package proposes to pay for these measures by, among other things, letting the Bush income tax cuts expire for household income above $250,000 and reducing various corporate and individual tax expenditures, such as those enjoyed by oil, gas, and coal companies. Senate Democrats have proposed a simpler “millionaires income surtax” of 3.25 percent to offset the costs.
Ideally, any new job creation proposals would be part of a larger, comprehensive debt-reduction package that put debt on a downward path as a share of the economy. Only in that scenario would businesses, markets, and the American public have confidence in the strength of the economy down the road and that the costs of any new policy will not continue to add to our debt.
However, it's encouraging that there have been serious efforts to ensure that any new actions from lawmakers are at the very least offset and do not continue to add to our mounting federal debt. As we like to say: when you're in a hole, the first rule is to stop digging.
If payroll tax cuts move forward, they should be paid for. If the House takes up the idea, even at the smaller current rate of 2 percent at a cost of about $115 billion, they should also at the very least identify measures to offset the costs. Even better, though, would be considering payroll tax cut proposals as part of a much bigger bipartisan package to reduce federal deficits.
Fitch Cuts Outlook on US Credit Rating to Negative
This afternoon Fitch Ratings lowered the outlook on the United States' credit rating from stable to negative. Fitch, considered one of the "big three" credit rating agencies along with Moody's Investors Service and Standard & Poor's (S&P), announced their decision one week after the Joint Select Committee on Deficit Reduction (Super Committee) failed to reach an agreement on at least $1.2 trillion in deficit reduction and almost four months after S&P lowered the U.S. credit rating from AAA to AA+. (Read CRFB's paper Understanding the S&P Downgrade)
In a press release (subscription required), Fitch affirmed the United States' AAA credit rating, but cited economic uncertainty, the high debt-to-GDP ratio and--of course--the failure of the Super Committee as reasons behind their decision to lower our outlook:
Fitch's revised fiscal projections envisage federal debt held by the public exceeding 90% of national income (GDP) and debt interest consuming more than 20% of tax revenues by the end of the decade, and including the debt of state and local governments - gross general government debt will reach 110% of GDP over the same period. In Fitch's opinion, such a level of government indebtedness would no longer be consistent with the U.S. retaining its 'AAA' status despite its underlying strengths. Such high levels of indebtedness would limit the scope for counter-cyclical fiscal policies and the U.S. government's ability to respond to future economic and financial crises.
The Negative Outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. 'AAA' sovereign rating will be forthcoming following failure of the Congressional Joint Select Committee on Deficit Reduction (JSCDR) to agree at least USD1.2 trillion of measures to cut the federal budget deficit over the next 10 years as mandated under the Budget Control Act passed in August (BCA 2011).
This should serve as yet another reminder to Washington that we MUST get our fiscal house in order--soon. A CRFB blog earlier this month focused on the potential impact of Super Committee failure on the U.S. credit rating--in fact, we noted that of the big three agencies, Fitch was the most optimistic about the U.S. credit rating. If it only took a week after the Super Committee deadline for Fitch to lower our outlook, imagine what the reaction would be if Congress voted to turn off or weaken the sequester (which some lawmakers are pushing for).
Like we've said countless times, the only way to truly fix our fiscal problems and reassure markets is a multi-year, comprehensive deficit-reduction plan that stabilizes and reduces debt as a percentage of GDP over the decade. Reforms to entitlement programs and the tax code must be part of the solution as well, and the sooner we put a plan in place the better. Judging from their press release, it looks like Fitch agrees with us:
Agreement and implementation in 2013 of a credible medium-term deficit reduction plan that would stabilise government indebtedness in the latter half of the decade would relieve downward pressure on the U.S. sovereign ratings, though by postponing the difficult decisions on tax and spending until after forthcoming Congressional and Presidential elections, the scale and pace of required deficit reduction will consequently be greater. Conversely, failure to reach agreement in 2013 on a credible deficit reduction plan and a worsening of the economic and fiscal outlook would likely result in a downgrade of the U.S. sovereign rating...Further deficit reduction will not be credible if it relies solely on further cuts in discretionary spending rather than reform to entitlements and taxation.
‘Line’ Items: Post-Turkey Edition
Stuffed – The Super Committee talked turkey, but in the end produced no meat. All that got placed before us was the warmed-over stuffing of partisan bickering and finger pointing. Americans have had their fill and are demanding action.
Gobbling Up Super Committee Leftovers – Some lawmakers are looking to step into the void caused by the Super Committee’s failure and are calling for a vote on a plan like the one that received bipartisan, majority support from the Bowles-Simpson Fiscal Commission. New York Times Columnist Tom Friedman called on President Obama to endorse Bowles-Simpson and tie it to a stimulus package. Meanwhile, some policymakers want to reverse the $1.2 trillion in spending cuts that will kick in beginning in 2013 due to the lack of a Super Committee deal. But President Obama has vowed to veto any circumvention of the sequester trigger and congressional leaders also reaffirmed their commitment to the trigger. Hopefully, the discussion will turn instead to a renewed commitment to forging a comprehensive deficit reduction plan that could get the trigger removed.
Clean Up Time – Preparing the Thanksgiving feast is quite a chore, but the cleanup is sometimes even more strenuous. Congress has lots of dishes that need to be dealt with. Patches for the Medicare “doc fix” and the AMT expire at the end of the year, in addition to many tax extenders like the R&D tax credit. Then there is the matter of the expanded unemployment insurance benefits and payroll tax holiday that expire at the end of the year. The Senate is expected to vote soon on a measure extending and expanding the payroll tax holiday this week, with a 3.25 percent surtax on income above $1 million to offset the cost. But the bill is not expected to survive a filibuster. Of course, there are also the remaining nine FY 2012 spending bills. The current stopgap measure funding the federal government expires on December 16. The cleanest option is to roll up the bills into one package, but differences over spending levels and policy riders could make things as messy and crowded as the post-Thanksgiving sink.
Key Upcoming Dates (all times ET)
November 30
- Senate Judiciary Committee hearing on a balanced budget amendment at 10 am.
December 1
- GOP presidential debate in Arizona sponsored by CNN at 8 pm.
December 10
- GOP presidential debate in Des Moines, IA sponsored by ABC News at 9 pm.
December 15
- GOP presidential debate in Sioux City, IA sponsored by Fox News at 9 pm.
December 16
- Continuing resolution (CR) currently funding federal government operations expires.
December 19
- GOP presidential debate in Johnston, IA sponsored by PBS NewsHour, Google and YouTube at 4 pm.
December 31
- Both houses of Congress must vote on a balanced budget amendment to the U.S. Constitution, as required by the Budget Control Act.
January 3, 2012
- Iowa Caucuses.
January 10, 2012
- New Hampshire Primary.
January 21, 2012
- South Carolina Primary.
January 31, 2012
- Florida Primary.
Deja Vu All Over Again: Another Busy December
News flash: Congress has a huge checklist to take care of. Many expiring tax provisions need to be dealt with, along with other temporary policies and the FY 2012 budget.
Doesn't this sound a lot like last year? Back in 2010, lawmakers had to deal with the 2001/2003 tax cuts, the doc fix, the AMT patch, unemployment insurance, tax "extenders", and FY 2011 appropriations -- in addition to a whole host of other non-budget-related issues -- in December.
Many had been counting on the Super Committee to include some of these provisions or or offset their costs in their plan, but obviously that is not an option anymore. Congress will have to deal with these issues themselves through the normal process.
These issues are:
- FY 2012 appropriations: Two weeks ago, Congress passed a three-bill "minibus" and included a continuing resolution through December 16 for the other nine appropriations bills. An attempt in the Senate to pass a second minibus failed, so it is increasingly likely that lawmakers will roll up the remaining nine into one package. This may be heavier to lift than Santa's sack, since among the nine are some appropriations bills -- such as Labor-HHS-Education and Financial Services -- that are magnets for policy riders.
- Unemployment insurance: The 2010 tax cut contained a 13-month extension of unemployment benefits that expires at the end of the year. Although there were frequent fights over paying for unemployment insurance (UI) in 2010, we have yet to see how this Congress will deal with the extension. Surely, there will be bickering between the House and Senate over if/how to pay for UI, but there has generally been enough commitment by Congress to get UI through despite that. CBO estimates that a one-year extension would cost about $44 billion.
- Doc fix: Last December, Congress passed a year long doc fix that was fully offset, mainly by changing the process for recovering overpayments of health insurance subsidies. This year, Medicare physician payments face a 30 percent cut in 2012 if nothing gets passed, making both the stakes and cost higher than ever. CBO estimates that a doc fix would cost $12 billion in 2012 and about $300 billion over ten years. We hope that lawmakers will follow the example of the most recent fix and offset the cost.
- AMT patch: The increased exemption for the Alternative Minimum Tax (AMT) will expire at the end of the year, reverting back to pre-2001 levels and hitting many middle- and upper-middle class households in the process. The AMT patch is certainly the most costly item that Congress will have to deal with as cumulative costs this of patching the AMT could total $700 billion, and about double that if the tax cuts are extended.
- Payroll tax cut: One of the stimulus add-ons to the 2010 tax cut was a decrease in the employee-side FICA tax rate from 6.2 to 4.2 percent. President Obama has proposed further lowering this rate to 3.1 percent, expanding it to employers, and eliminating the employer-side payroll tax for firms that increase their payroll. This policy from the American Jobs Act comes at a hefty price tag of about $265 billion. A simple one-year extension of the current 4.2 percent rate would probably cost in the neighborhood of $120 billion. The Senate is expected to vote this week on this provision alone, offset -- like other stand-alone pieces of the Jobs Act -- with a millionaire surtax.
- Tax extenders: The tax extenders are a group of narrowly targeted temporary tax expenditures that are routinely extended year after year (the most notable is the R&D tax credit, which has been temporary for 30 years). About 80 of them are set to expire at the end of this year. After having trouble passing an extension last year, lawmakers finally stuffed the extenders into the 2010 tax cut package. Individually, most of these extenders are small, but together, their ten-year cost could add up to hundreds of billions of dollars.
Just like last year, this December is a big month for the budget. Not only do this year's appropriations need to be finalized, but many costly temporary policies are due for extensions. Essentially, it is another end of the year where we see how many current policies become current law.
Friedman: "Go Big, Mr. Obama"
In his New York Times column this morning, Tom Friedman urged the president to “Go Big” to put the country on a “sustainable economic recovery path”. Friedman believes Obama should champion a large, bipartisan fiscal plan and should use the Simpson-Bowles Fiscal Commission plan as the starting point because it is calls for large enough savings to fix the problem and already has bipartisan support.
"People know leadership when they see it — when they see someone taking a political risk, not just talking about doing so, not just saying, 'I’ll jump if the other guy jumps.' In times of crisis, leaders jump first, lay out what truly needs to be done to fix the problem, not just to win re-election, and by doing so earn the right to demand that others do the same....
"First, he’d be proposing a deficit-cutting plan that matches the scale of our problem — one with substantial tax reform and revenue increases, a gasoline tax, deep defense cuts and cutbacks to both Social Security and Medicare. That is the Simpson-Bowles plan, and it should be Obama’s new starting point for negotiations. The deficit plan Obama put out last September is nowhere near as serious."
Just because the Super Committee was not able to agree on a fiscal plan does not absolve lawmakers from having the responsibility to fix our fiscal problems. Congress and the President must step in to lead the way forward. And, as Friedman also says, they must "Go Big".
Kudos to Those Who Are Resisting Efforts to Turn Off the Trigger!
We talked yesterday about the importance of keeping the trigger, or the automatic sequester of $1.2 trillion in spending cuts, in place in order to help bring both sides of the aisle back to the negotiating table to enact smart and forward-looking reforms to the budget. Absent putting in place a fiscal plan with savings from all parts of the budget, lawmakers could even strengthen the current trigger to help them produce a package of savings of closer to $3 or $4 trillion over ten years, or annual debt caps, as the Peterson-Pew Commission has called for. Also, it's encouraging to see Senator Durbin calling for a new process that would allow bipartisan proposals to be considered in Congress.
But what we can't do is weaken or dismantle the trigger implemented in the Budget Control Act without putting actual savings or a stronger enforcement mechanism in place. That's why it's very encouraging to see many lawmakers from both sides of the aisle, including leaders in Congress and the White House, stepping up to resist efforts to turn off the trigger.
Last night in a press conference following the Super Committee's announcement, President Obama stated that he would veto any efforts to turn off the trigger, affirming that:
“There will be no easy off-ramps on this one. We need to keep the pressure up to compromise, not turn off the pressure. The only way these spending cuts will not take place is if Congress gets back to work and agrees to a balanced plan to reduce the deficit by at least $1.2 trillion.”
Likewise, many other lawmakers -- including Senate Minority Leader Mitch McConnell (R-KY) and Senate Majority leader Harry Reid (D-NV) -- have lent support for keeping the trigger in place, sometimes noting that far larger savings are needed.
"The good news is that even without an agreement, $1.2 trillion will still be cut from the deficit.... While we'll still reduce the deficit by $1.2 trillion, much more needs to be done."
“Make no mistake: we will achieve the more than $2 trillion in deficit reduction we agreed to in August. The sequester was designed to be painful, and it is. But that is the commitment to fiscal responsibility that both parties made to the American people. In the absence of a balanced plan that would reduce the deficit by at least as much, I will oppose any efforts to change or roll back the sequester."
We hope other lawmakers join in resisting efforts to turn off the trigger, and we'll be sure to keep track of them here at The Bottom Line. CRFB hopes lawmakers can come together to enact fiscal reforms. Then, and only then, they should remove the sequester; it should not be the other way around.
My View: Rudy Penner
CRFB board member Rudy Penner recently authored a CNN Money op-ed in which he writes that Congress has delayed the necessary fiscal adjustments for so long that now they have become quite painful, resulting in nothing but political gridlock. He also states that while he hopes an agreement will be reached over the next year, the most likely scenario is that a fiscal crisis will be the only thing that can force Congress to act. CRFB hopes lawmakers can act thoughtfully and proactively, because it's always better to make changes on your own terms and well in advance.
He writes:
I believe that the president's fiscal commission got the balance about right when it proposed solving 70% of the long-run problem by slowing spending growth and 30% by raising revenues (not counting the resulting savings in interest costs).
Although I have raised the hope that productive negotiations might occur next year, a wise betting man would not risk much on this outcome without demanding huge odds. It is much more likely that we shall have to wait for a sovereign debt crisis similar to Greece's before our politicians act rationally.
Britain lost its preeminent position in world finance primarily because of huge debts accumulated during World War I. The United States may be the first country in history to lose its dominance because of rising health costs.
Click here to read the full op-ed.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.
‘Line’ Items: Super Failure Edition
SuperBad – Well, they did it after all. In an amazing feat of utter failure, the so-called Super Committee managed to under-perform the already low expectations and come up with absolutely nothing. While the official deadline for the panel to issue recommendations is Wednesday, it must submit any proposal to the Congressional Budget Office 48 hours ahead of time, making today the effective deadline. A statement from the panel's co-chairs this afternoon acknowledges there will be no deal. The failure to address the mounting national debt will not only be felt in the longer term, but this meltdown will have some immediate effects given the several unresolved fiscal issues facing Congress and the short period of time to address them before the end of the year. This is a defining moment for our political system. The Super Committee was a microcosm of all the ills inflicting the system. With voter approval of Congress already at an all-time low, will this high-profile failure to address a major challenge push the electorate over the edge? With both the House and Senate home this week for Thanksgiving, will constituents call them turkeys?
Go Small Goes Down – The Super Committee decided the best chance for a deal was to negotiate downwards. The high point was when Democrats on the panel offered a proposal that would result in deficit savings of $3 trillion over the next decade through a mix of reductions in health care spending and taxes. Although Republicans later responded by putting some tax revenue on the table, the offers from both sides became smaller with each round. That approach ultimately reached its logical conclusion with the Committee getting down to nothing. All along, CRFB advised a ‘Go Big’ approach, contending that it could make achieving a deal easier by putting everything on the table and offering shared sacrifice. We also suggested that it could be done in two steps with a meaningful down payment from the Super Committee and a detailed framework for a second stage.
Go Big Doesn’t Go Away – Last week Sen. Joe Manchin (D-WV) and Sen. Mark Kirk (R-IL) introduced a non-binding ‘Sense of the Senate’ resolution calling on Congress to “Go Big” and enact at least $4 trillion in deficit reduction over the next decade. Also last week, a bipartisan, bicameral group of lawmakers held a press conference showing their support for the Super Committee and encouraging it to Go Big. The Go Big Caucus will continue to work towards a comprehensive fiscal solution.
BBA DOA – As required by the Budget Control Act, the House voted on a balanced budget amendment on Friday. The measure, H.J. Res. 2, failed to attract the two-thirds majority needed to pass. The Senate will also vote on a BBA sometime after it returns from recess, with the same results expected. For budget process reform ideas that do not require a Constitutional amendment, visit http://budgetreform.org/.
Eyes Turn Back to Appropriations – At least Congress met one deadline, though they cut it close. On Friday, with the continuing resolution (CR) funding the federal government about to expire, President Obama used his autopen to sign from Asia the measure containing a new CR funding government operations through December 16. The package also contained three FY 2012 spending bills – Agriculture, Commerce-Justice-Science, and Transportation-HUD. But the fate of the other nine spending bills is not clear. Wrapping them up into one big bill seems the most likely scenario.
Key Upcoming Dates (all times ET)
November 22
- GDP for third quarter released by Commerce Department at 8:30 am.
- GOP presidential debate in Washington, DC sponsored by CNN, Heritage Foundation, and American Enterprise Institute at 8 pm.
December 1
- GOP presidential debate in Arizona sponsored by CNN at 8 pm.
December 10
- GOP presidential debate in Des Moines, IA sponsored by ABC News at 9 pm.
December 15
- GOP presidential debate in Sioux City, IA sponsored by Fox News at 9 pm.
December 16
- Continuing resolution (CR) currently funding federal government operations expires.
December 19
- GOP presidential debate in Johnston, IA sponsored by PBS NewsHour, Google and YouTube at 4 pm.
December 31
- Both houses of Congress must vote on a balanced budget amendment to the U.S. Constitution, as required by the Budget Control Act.
January 3, 2012
- Iowa Caucuses.
January 10, 2012
- New Hampshire Primary.
January 21, 2012
- South Carolina Primary.
January 31, 2012
- Florida Primary.
The Importance of the Sequester
When Congress raised the debt ceiling in last August’s Budget Control Act (BCA), it mandated at least $1.2 trillion in further savings by 2021, from either Plan A, the bipartisan Super Committee, or Plan B, automatic cuts in spending -- also known as a sequester. The sequester would have automatically been turned off if a plan from the Super Committee to save at least $1.2 trillion were enacted.
However, with a Super Committee failure expected to be official very shortly, it is important that Congress leave Plan B in place rather than overriding it for three main reasons:
- To reassure markets that at least some savings will be put in place;
- To keep both sides of the aisle at the negotiating table;
- To create confidence that lawmakers stick to what they agree on.
Of course, relying on the sequester for savings is not at all ideal policy, but it can help force lawmakers to act. We need to enact smart reforms that improve economic incentives to work, save, and invest. We elaborated on this two weeks ago after some lawmakers suggested turning off or weakening the sequester. But what would be much better than just keeping the current sequester in place would be for Congress to quickly enact a Go Big comprehensive fiscal plan or, assuming that's too much to ask in the next month, strengthen the current sequester -- either through additional automatic savings or debt caps as proposed by the Peterson-Pew Commission -- to help put a fiscal plan in place.
To recap, the sequester would enact about $1.2 trillion in automatic spending cuts from defense and non-defense programs alike, but with some notable exemptions for low-income programs, Social Security, and Medicare cuts only up to 2 percent. CBO has estimated that the sequester would reduce defense spending by about $450 billion over ten years, non-defense discretionary spending by about $300 billion, mandatory spending by about $170 billion, and interest payments by about $170 billion.
First, our fiscal problems are so serious that Congress needs to reassure credit markets and investors that it has a mechanism in place to begin dealing with our debt path. Setting debt on a clear, downward path will require well over $1.2 trillion in savings, but calling for a certain level of savings backed up with a trigger can help lawmakers move in the right direction. As recent statements from credit rating agencies have made clear, their current worrisome outlooks are based on Congress maintaining the sequester. Weakening or overturning the sequester would worsen those outlooks.
Second, and most importantly, the threat of automatic spending cuts to areas of the budget that neither side particularly wants to see can keep both parties at the negotiating table – namely, Republicans’ aversion to defense cuts and Democrats’ aversion to domestic spending cuts. Keeping both sides at the table is critical for lawmakers to Go Big and propose $3 to $4 trillion in new savings.
Lastly, as we’ve stated before, Congress keeping its word and even partial resolve is important for maintaining and even improving confidence in credit markets, among various investors, and by job-creating businesses. Debt reduction involves difficult but very necessary decisions, and it also requires sticking to those decisions.
The BCA sequester brings bipartisan discomfort and is a valuable instrument for forcing bipartisan negotiations for putting in place smart reforms now, well in advance of a debt crisis, in order to avoid paralyzing debt levels and the risk of having to make rapid reforms down the road.
As Erskine Bowles testified earlier this month, "The only thing worse than the committee failing to agree on savings would be if Congress followed that by voting to turn off the sequester." Congress must not abdicate its own sequester mechanism, and it must plunge forward in tackling the nation’s long-term debt problem.
Let's Negotiate Savings Up Instead of Down
As we said earlier this week, the Super Committee needs to be finding ways to negotiate its way up to larger savings, not working to push savings down to find the lowest common denominator. Unfortunately, the trend seems to be continuing. According to recent reports, Super Committee members have been working on a possible package of between $500 billion and $1 trillion in savings.
That's not going to cut it if we're going to succeed in putting debt on a downward path as a share of the economy. Compared to how much debt we'll be adding over the next ten years, based on CRFB's Realistic Baseline, these newer offers are just a drop in the bucket.
^Also would use war savings to pay for jobs bill and doc fix
*Difference between CRFB Realistic Debt in FY 2011 and FY 2021
We need to restore faith in the strength of the economy down the road and in the political system. Let's not waste this great opportunity.