Biden Fiscal Working Group Holds First Meeting

The bipartisan, bicameral group of lawmakers hand-picked by congressional leaders had its first meeting today with Vice President Joe Biden to discuss a possible debt reduction agreement. In a statement afterwards, the Vice President said that the meeting was “productive” and that the working group will meet again on Tuesday, May 10.

With public debt quickly heading towards the statutory debt ceiling, coupling a debt limit increase with some form of debt reduction appears quite likely. The Biden group is well positioned to fast track such a debt ceiling agreement, which should happen quickly. As CRFB said in a statement this morning, adopting a debt limit increase along with enforceable debt and savings targets and specific debt reduction policies could be an appropriate compromise.

A budget enforcement mechanism, like a debt target, has emerged as a basis for a possible deal. While budget process can play an essential role in putting the country on a sound fiscal course -- the Peterson-Pew Commission on Budget Reform has put forth recommendations for making targets effective through triggers -- process alone is not enough. Concrete policies must be agreed upon as well. Accompanying targets with a down payment of specific and substantial debt reduction will demonstrate lawmakers’ commitment that the targets are not a cop out.

Debt targets are critical, but they are a means, not an end. Including some tough choices in a down payment will give the public and markets greater confidence that the targets are not just an empty promise of future actions that will never happen.

Read the CRFB paper on responsibly raising the debt limit.