CAP President and CEO John Podesta testifies before the House Committee on the Budget.Read the full testimony (CAP Action).
The broad contours of our long-term deficit challenge are well-known. Over the next several years, the eye-catching deficits during the Great Recession will subside, but deficits will not disappear. Over time, if nothing is done, those deficits will widen, causing us to take on an unsustainable debt burden, and forcing us to put an ever-increasing share of our national income toward servicing that debt, rather than making important investments in our economy and our people. This is clearly a future we must avoid.
But our long-term deficit dilemma is not, as is so often claimed, purely a “spending problem.” There is no question that current projections of federal spending are alarming and clearly unsustainable. It is not the case, however, that all federal spending is contributing equally to that trajectory. In fact, most federal spending is actually expected to remain steady or even fall, as a share of the economy, over the next 10 years and beyond. The exception, however, is federal health spending, and to a much smaller degree, Social Security. This suggests that, far from being a “spending problem,” what the United States actually faces is an aging population, and a “rising cost of health care” problem.
That is why it is so important that Congress and the administration work diligently to implement the cost containment strategies and delivery reforms that were part of the Affordable Care Act. These reforms, along with the rest of the bill’s provisions, are projected to reduce the deficit by more than $230 billion over the next 10 years and begin to restrain the growth in health care spending.
We also have a problem on the other side of the balance sheet. While rising health care costs and an aging population will combine to drive up government spending, at the same time a stubborn devotion to a tax code riddled with inefficiencies and loopholes will ensure that the country takes on ever more debt to pay for even the most basic of public services. Those who would limit federal revenue to the “historical average” of 18 percent of gross domestic product are ignoring an important, inescapable reality: The challenges we face today and will face in the future are different from those we faced 50 years ago.
CAP President and CEO John Podesta testifies before the House Committee on the Budget.Read the full testimony (CAP Action).
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