The drumbeat for action to reduce our long-term debt continues. Today the Debt Reduction Task Force of the Bipartisan Policy Center issued its recommendations on ways to put the United States on a sound fiscal course. The bipartisan panel was chaired by former Senator Pete V. Domenici and former CBO and OMB director Alice Rivlin. CRFB President Maya MacGuineas also served on the task force.
In releasing the recommendations today, Domenici called America’s debt a “silent killer” that threatens U.S. prosperity and security. The plan, “Restoring America’s Future,” tackles the dual goals of sustaining the economic recovery and reducing the growth of public debt. It seeks to create 2.5 to 7 million jobs over the next two years and to stabilize the debt below 60 percent of GDP by 2020.
Aspects of the plan include:
- Enact a payroll tax holiday for one year
- Stabilize the debt below 60 percent of GDP by 2020
- Achieve primary budget balance (excluding debt interest payments) by 2014
- Reduce federal spending to 23 percent of GDP by 2020 with revenue at 21.4 percent
- Reform the tax code to simplify it and broaden the tax base
- Cut individual and corporate tax rates, eliminate most tax expenditures and simplify the rest and establish a new 6.5 percent national “Debt Reduction Sales Tax”
- Restrain health care costs, including a cap on the tax exclusion for employer-sponsored health care and phasing it out over ten years
- Reform Social Security
- Freeze discretionary spending, including defense
- Reform the budget process
- Enact strict statutory spending caps and PAYGO
- Change the federal budget process from annual to biennial budgeting
- Enact long-term budgets for entitlements
With the release last week of the Bowles-Simpson plan, produced by the leadership of the President's fiscal commission, as well as other recent proposals, policymakers have plenty of ideas to work with and momentum is clearly on the side of devising a plan to reduce our long-term debt.
We commend the work of the Debt Reduction Task Force and hope that lawmakers will take its ideas seriously.