We Can Do This: Progressive Fiscal Reform Can Bring Our Nation’s Deficit into Balance
The failure of the bipartisan National Commission on Fiscal Responsibility to approve a federal deficit reduction plan last week does not let President Barack Obama or Congress off the hook. The need to address our medium- and long-term deficits isn’t any less pressing because the commission could not reach the consensus necessary for up or down votes in Congress.
The president needs to put forward a credible program for his new budget. The starting point for the president, however, should not be the proposal of commission chairmen Erskine Bowles and Alan Simpson, which got 11 out of 18 votes. That proposal failed to gain sufficiently broad bipartisan support and is substantively flawed. The reason: The Simpson-Bowles plan is too heavily reliant on spending cuts that are speculative and unlikely to be enacted and would be damaging to the U.S. economy if fully implemented.
Instead, the starting point should be a well-founded, honest, realistic progressive plan for deficit reduction. That’s why the president should consider the new “50-50” plan released today by the Center for American Progress as his starting point. Our plan relies equally on spending cuts and tax revenues to achieve primary balance (when revenues match expenditures except interest payments on the debt) by 2015, with specific recommendations on what to cut and how to cut it, and on what to tax and how to tax it.
In contrast—and notwithstanding the good faith efforts of the chairmen and members—the Bowles-Simpson proposal is fundamentally unbalanced and unrealistic. The task assigned to the commission was to offer a plan to bring the budget to primary balance by 2015, as well as achieve meaningful long-term deficit reduction. The Bowles-Simpson plan does this but in the wrong way.
The cuts in discretionary spending are excessive and unlikely to ever come to pass because they will harm our nation’s long-term economic competitiveness and violate an array of social compacts that underpin the common good of our country. For 2015, the proposal slashes nonsecurity discretionary spending authority by 17 percent relative to the president’s most recent budget blueprint. That is simply too much to carve out of what the nation spends on education, the Federal Aviation Administration, the National Institutes of Health, and other important programs and agencies that are essential to ensure sustained, broad-based economic growth and protect our citizens and our values.
And while the Center for American Progress applauds efforts to provide some parity with nondefense and defense spending, the $145 billion cut in national security spending is so large that it is both risky and exceedingly unlikely to happen. Putting forth a plan that is untenable in its basic choices serves little purpose.
The Bowles-Simpson proposal also suffers from a failure of candor. Although one can make the case that the willingness of 11 commission members to cut so drastically was an act of courage, they nevertheless failed to identify specifically which programs, agencies, and weapons systems would face the ax. Spending cuts are easy in the abstract. The public deserves to be told specifically what’s really at stake.
Another serious flaw in the Bowles-Simpson plan, however, is that it hinges on a total reconstruction of the tax system. A fundamental and massive reform of the tax code to make it simpler, fairer, and employment- and growth-oriented is needed. But to have deficit reduction in the next few years dependent on achieving comprehensive reform is foolhardy. Deficit reduction should not hinge on Congress and the president reaching agreement on something as complicated and contentious as comprehensive tax reform.
Yet there are several important principles evident in the Simpson-Bowles plan that the president could and should adopt. The willingness to cut defense spending, an area often considered sacrosanct, is laudable. So, too, is the decision to put Social Security on the table for discussion. The plan also relies at least in part on new revenue, which is a key ingredient in any successful deficit reduction proposal. And the Bowles-Simpson plan acknowledges that economic recovery must come before deficit reduction. Those are important principles that the president should embrace.
All four of these principles define the deficit reduction plan released today by the Center for American Progress. Our 50-50 plan offers a pragmatic, realistic, and progressive vision for the first concrete step toward a sustainable budget. Our plan would achieve primary balance by 2015 through an even mix of spending cuts and new revenue. We identify specific spending cuts, rather than employing opaque budget mechanisms, or mere “illustrative examples.” And we include steps to make Social Security fiscally viable for the next 75 years through a balanced program of revenue and benefits restraints. We will unveil our progressive Social Security reform plan later this week.
In addition, we do not rely on a root-and-branch upheaval of the tax code which may not happen for some time, instead providing a way to raise the required revenue within the broad confines of the system we have now. Although we do offer substantial defense spending reductions, they are specific, realistic, and consistent with a sustainable and strong national security strategy. And with all that, our plan would result in spending and revenue levels that are firmly within the mainstream of the myriad deficit reduction plans offered within the last few weeks.
It is time for President Obama to embrace a plan of his own that takes deficit reduction seriously but does not hurt growth or make the weakest among us bear the greatest burdens of past overspending. We think our proposal would be a good foundation for that purpose.
John D. Podesta is President and Chief Executive Officer of the Center for American Progress.