We can do this. Addressing the long-term federal budget deficit is a daunting challenge, no doubt, but it is not an insurmountable one. In our new report, "The First Step," we offer plans to take the first big step toward a fiscally sound budget—the step needed to get the federal budget into primary balance in 2015. Bringing total government revenues to equal total government spending, with the exception of interest payments on the national debt, is achievable and would pave the way for a federal budget on a sustainable, responsible, path.
The Center for American Progress previously published three other reports on federal budget deficits that point the way to this goal, and feature some of the means to reach it—details that are fully laid out in this report. Now we turn to the revenue side of the equation—offering revenue options that fill in the spending cut plans from our third report, "A Thousand Cuts." In our newest report, we present five complete plans for hitting primary balance in 2015.
In "The First Step," we argue that, after balancing the needs of the country and the range of divergent views on the path forward, the 50-50 plan we offer represents the most reasonable compromise. Under this plan, spending would be 22.7 percent of GDP, down from 24.8 percent of GDP in fiscal year 2010, and revenue would be 19.8 percent of GDP, still lower than the 20.6 percent of GDP raised at the end of the Clinton administration.
We are not endorsing a 50-50 split for reaching primary balance as a matter of principle. What we are endorsing is our specific approach to doing so. A 50-50 proposal that decimated programs that help the neediest or promote economic growth, or raised taxes in ways that were unfair and discouraged productive investment could be worse than no plan at all.
Any deficit reduction plan is a balancing act between spending cuts, tax increases, the needs of the nation, and the wide range of views on which of these are most important. This report offers five different balances for getting to the 2015 target of primary balance. We believe the 50-50 plan, accompanied by a crusade to deliver government services more efficiently and effectively, offers the best option.
For more on this topic please see:
- The First Step by Michael Ettlinger, Michael Linden, and Reece Rushing