Can You Do Better Than DC Lawmakers?
Over the past few years, lawmakers have engaged in a series of budget showdowns trying to avoid fiscal speed bumps and reduce deficits. However, debt projections continue to show an unsustainable outlook, and there appears to be little appetite for the kind of deal that would be necessary to put it on a downward path as a percent of GDP. That's where you come in.
CRFB has updated its budget simulator, incorporating the latest budget projections and providing new options for putting debt on a downward path to 60 percent of GDP by 2024. By the standards of current budgets, the target is ambitious, requiring more than $4.8 trillion of savings over ten years, but there are plenty of ways for users to get there. As usual, there are sizeable options to cut spending and raise revenue as well as spending increases and tax cuts.
Since the simulator was last updated in 2012, the biggest change is the removal of 2001/2003/2010 tax cut extension options (they were mostly extended) and the insertion of sequester options. Users can repeal the entire sequester, repeal half of it, further reduce discretionary spending as in the House budget, or keep it as is.
We also have produced new options, some of them coming from recent policy proposals like the President's budget and House Ways and Means Chairman Dave Camp's (R-MI) tax reform draft. These options include restricting eligibility for Pell grants, restoring the less generous 2009 estate tax parameters, increasing the standard deduction, reducing the Earned Income Tax Credit, and repealing the Davis-Bacon Act. There are also a few new "doc fix" options, reflecting proposals from the Senate and the Medicare Payment Advisory Commission.
Since its creation, CRFB's budget simulator has been visited more than 600,000 times. In addition to updating the simulator, we have published the results of our simulator since its last update in March 2012. In that time, almost 12,000 users have voluntarily submitted their results with some interest takeaways. Around 80 percent of users successfully reduced debt to 60 percent of GDP by 2021. The top five most popular choices were:
- Reverse the "Grow the Army" Initiative (83%)
- Include state and local workers in Social Security (83%)
- Reform Fannie Mae and Freddie Mac (79%)
- Reduce Iraq/Afghanistan troop levels to 30,000 (78%)
- Raise Social Security's normal retirement age to 68 (77%)
Other policies that were popular included switching to the chained CPI for Social Security cost-of-living adjustments (72%) and enacting a 5.6 percent surtax on millionaires (65%).
The simulator is a great tool for quantifying the trade-offs we face with the budget and debt. Users may find it difficult to reach the target without choosing policies they may find less than ideal or passing on deficit-increasing policies they would otherwise like, but that is the reality of fiscal policy. Putting debt on a sustainable path will require making difficult choices.
To use the simulator, click here.
To see CRFB's other interactive tools, click here.