While Congress Makes Budgeting Look Hard, Americans Show How to Do It
In addition to governing by crisis and failing to adopt a budget, Washington is slated to welcome another new normal with trillion-dollar deficits expected to return this fiscal year and continue thereafter. And that is just the tip of the iceberg.
National debt held by the public is projected to reach 95 percent of Gross Domestic Product (GDP) within ten years and will exceed the size of the economy if recent tax cuts and spending increases are extended. The long-term fiscal outlook has debt on course to reach levels never seen before, reaching 155 percent of the economy by 2050.
Rising debt will slow income growth, increase interest payments, place upward pressure on interest rates, weaken the ability to respond to the next recession or emergency, place an undue burden on future generations, and heighten the risk of a fiscal crisis.
While lawmakers are unwilling to get our fiscal house in order, there are hopeful signs coming from outside the beltway. Through the interactive Debt Fixer budget tool from the nonpartisan Committee for a Responsible Federal Budget, thousands of Americans made many of the same budget decisions lawmakers face and saw how those choices would affect our debt.
Users were asked to make choices on 90 different policy options with the goal of putting debt on a downward path to 70 percent of GDP within ten years and 40 percent of GDP — about the post-war average — by 2050. The goals have since changed because lawmakers subsequently made the debt situation worse.
Since July 2018, more than 180,000 users visited the Debt Fixer and more than 10,000 volunteered to share their choices publicly. The results indicate there may be more support for reducing our debt through new government spending and tax policies than the current hyper-partisanship and inaction in Congress suggest.
The top two policy options — reducing prescription drug costs, and ending the wars in the Middle East and Afghanistan — received support from 85 and 83 percent of users, respectively. Other popular options included using the Chained Consumer Price Index (Chained-CPI) to index Social Security Cost of Living Adjustments (COLAs) and other benefit programs (67 percent), and raising the Social Security Normal Retirement Age to 68 (63 percent).
As Congress considers repealing the “Cadillac tax” on high-cost employer-sponsored health plans, 59 percent opted to strengthen the policy by replacing the tax with a cap on the tax exemption for employer-paid health insurance programs.
Nearly half of users chose to repeal the Tax Cuts and Jobs Act (TCJA) while another 22 percent chose to extend the law but to undo all the individual income tax rate cuts. When you add up the choices made by users, our nation’s fiscal outlook improves considerably. The average user achieved $7.6 trillion in debt reduction over a decade.
Our leaders could learn a great deal from their constituents. So far, the magnitude of the budget deficit has only been equaled by the inaction towards passing a budget to get the debt under control. It should surprise no one that the new fiscal year began in October with the same old dysfunction that has plagued Washington for years.
None of the 12 appropriations bills needed to fund the federal government have been enacted and, once again, a stopgap measure is all that is keeping the government open through November 21.
Even more disheartening is the fact that the last time the budget process actually worked and all appropriations bills were passed on time without being bundled together was in 1994, when “Forrest Gump” topped the box office, Major League Baseball was on strike, and “Seinfeld” was the number one show on television.
Instead of ignoring our unsustainable fiscal situation, we must face it head on. Getting our fiscal house in order requires tough choices and moving beyond our new normal of budget dysfunction, partisan logjams, and trillion-dollar deficits.
Policymakers need to lead informed discussions with their constituents about our nation’s future. Using interactive tools like the Debt Fixer can help start the conversation.
Mike Murphy is Chief of Staff and Director of Strategic Initiatives for the Committee for a Responsible Federal Budget, a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact. Learn more about the Committee at http://www.crfb.org/.