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Idea of the Day: Today’s Fiscal Policies Are Not Sustainable

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There are very few things everyone in Washington can agree on these days. But the one notion that will get heads nodding across the political spectrum is that today’s fiscal policies simply are not sustainable. If we keep doing what we’ve been doing, not only will the federal budget stay permanently deep in the red but critical public investments such as education and infrastructure will continue to go underfunded. Key national priorities such as strengthening the middle class, reducing poverty, and building a world-class infrastructure will remain unaddressed. Income inequality will continue to rise, confidence in America’s ability to govern its fiscal affairs will continue to fall, and sooner or later we will find ourselves struggling through another economic crisis. Clearly, these are all outcomes that we must avoid. That is why nearly everyone—left, right, and center—agrees that changes in fiscal policy will be necessary.

The nonpartisan Congressional Budget Office estimates that if we do not change course, annual federal budget deficits will never drop below $800 billion. Tax revenues will cover only 80 percent of federal spending, which means we will have to borrow 20 cents for every dollar we spend. As a result, publicly held debt, measured as a share of our national economy, will rise from about 73 percent today to nearly 90 percent by the end of the decade, according to current projections.

That is a budget trajectory fraught with serious risk. No one knows with precision when our debt levels will become so burdensome that they trigger severe economic consequences. But there are few who would disagree that such a level does exist, and that we would do well to avoid finding out exactly what that level is. For that reason, budget experts and economists from all perspectives agree with the goal of preventing such a treacherous rise in the debt-to-GDP ratio.

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To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund, women's issues)
202.741.6285 or kpeters@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, LGBT issues, gun-violence prevention, the National Security Agency)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (energy and environment, Legal Progress, higher education)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org

 

This is part of a regular column: Idea of the Day

For more from the same column, click here