What a 'Balanced Approach' to the Budget Means

(CC Image via Flickr User AMagill)

You’ll likely hear a lot about balance, balanced approaches, and balanced budgets over the next few months as the budget battles rage on. So the question must be asked: what exactly is a balanced approach?

A truly balanced approach is a plan that both helps the economy to grow and addresses our coming debt crisis. It’s a budget that doesn’t disproportionately tax or jeopardize the social safety net Americans rely on. A balanced approach leads to economic, job, and income growth. Balancing the budget is the key component to a “balanced approach.”

Balancing the budget could be the single most important way to grow the economy, long-term. Research conducted by the economists Carmen Reinhart and Kenneth Rogoff indicates that when the debt exceeds 90 percent of gross domestic product (GDP), the economy grows 1 percent more slowly than economies with lower debt to GDP ratios. One percent growth translates to 1 million jobs per year. It’s clear from their research that a balanced budget means strong growth.

Liberals’ definition of balance is merely an attempt to justify higher taxes while ignoring the real challenges our economy faces. Unfortunately, The Washington Post reported that “Democrats have no intention of doing away with deficits in the next decade.”

A balanced approach recognizes that no amount of tax increases can get to the heart of our fiscal challenges. Our debt crisis is driven by spending, specifically mandatory spending. The Congressional Budget Office’s latest Long Term Budget Outlook projects that by 2023 mandatory spending will grow to 64 percent of the federal budget.

A balanced budget approach looks at every aspect of our fiscal nightmare and addresses each responsibly. Medicare, Medicaid, and Social Security are not only the sources of tremendous economic imbalances, but they are headed down a path to insolvency.

A balanced budget approach evaluates each of these programs and puts in place reforms that not only protect the economy from crumbling but also protect the social guarantee of the programs themselves for future generations.

A balanced budget approach sends a signal to the private sector that Washington is serious about getting the economy back on track for the long term. It recognizes that the most sustainable and successful path to economic growth is not centered in Washington, but rather on Main Streets all across the country. Data shows that 60 to 80 percent of all new jobs come from small businesses. But slow economic growth and recovery has led to uncertainty here as well, leading small businesses to think twice before expanding.

A balanced budget approach shows global investors that the United States acknowledges that “the state of the U.S. government’s finances is the greatest risk to the world economy,” and are taking substantive steps to address it. Our national debt has been characterized as the greatest threat to our national security.

This is not about austerity. It is not ideology. It is about helping our economy expand and reducing our debt. A balanced budget approach is a balanced approach. Without a balanced budget, no other spending priorities are possible, private sector growth is stymied, and the long-term outlook remains bleak. The longer our debt goes unaddressed the larger a threat it poses and the greater a challenge it is to overcome. At more than $16 trillion and growing, it’s already a daunting problem. Balancing the budget in 10 years is a responsible, commendable, and achievable goal that the House Budget Committee has laid out, and it is at the heart of a truly balanced approach.