Today, former Fiscal Commission co-chairs and Moment of Truth Project co-founders Erskine Bowles and Alan Simpson have released a new framework, calling for $2.4 trillion in deficit reduction over the next ten years as well as additional long-term reforms. The proposal builds upon where the President and Congressional leaders were in the fiscal cliff negotiations but pushes both sides to do more.
Last month, we highlighted the “fiscal speed bumps” resulting from the fiscal cliff deal. With the signing of the bill which temporarily waived the debt limit by President Obama on Monday night, we can scratch off one fiscal speed bump and add three more.
A recent blog post by International Monetary Fund (IMF) economists Carlo Cottarelli and Philip Gerson on the IMF Direct blog highlights the importance of how deficit reduction plans are designed. Like many of the economists in our post last week, they make the case for a well-designed deficit reduction plan for the federal government to solve its fiscal problems.
Our blog yesterday noted that the debate over stimulus versus deficit reduction is much more nuanced than is often portrayed. Although these positions are sometimes characterized as directly opposing, there is often a lot of overlap. We described the difference as more about emphasis rather than direction.
A recent op-ed from Joe Scarborough in Politico has brought back attention to the stimulus vs. deficit reduction debate.
In an interview with Forbes contributor Henry Doss, former Fiscal Commission co-chair Erskine Bowles explains just how our unsustainable debt trajectory threatens the future of U.S. innovation and may be preventing some businesses from investing due to the uncertainty.
First, Bowles says that debt and deficits really do deserve the center stage:
Although labeled as the "fiscal cliff deal," the American Taxpayer Relief Act (ATRA) enacted into law left many budget issues unresolved or only temporarily resolved. While the deal permanently addressed the expiring tax cuts and AMT patches, many other provisions were only extended temporarily. The sequester, one of the largest components of the cliff, was delayed for only two months.
Over the past week, CRFB has examined the composition, budgetary effects, and economic effects of the American Taxpayer Relief Act (ATRA), which replaced most of the fiscal cliff.