Carter and Weinstein: Look Beyond Ten Years
In an op-ed in POLITICO, former Senate Budget Committee staffer James Carter and Fiscal Commission adviser Paul Weinstein advised lawmakers to look beyond the short-term fiscal picture and the next ten years to the longer term. They note that too much focus has been on improvements in the near term due to legislative changes and technical re-estimates.
Since August 2010, Washington has achieved roughly $2.7 trillion in deficit reduction over the next decade, plus additional savings totaling $1.2 trillion if the “sequestration” spending cuts remain in place. This may all seem like good news, but as those outside of Washington know, life goes on beyond the 10-year budget projections offered by the Congressional Budget Office. And in that context, the deficit reduction to date has ignored the true drivers of our national debt.
In fact, the longer-term picture is devastating. According to the Committee for a Responsible Federal Budget, by 2026, we will return to $1 trillion annual deficits and the federal debt will be headed toward unprecedented levels. By 2031, mandatory spending — Medicare, interest payments and other spending not controlled by Congress through the appropriations process — will consume ALL federal revenue. Think about that: Every penny collected in taxes will have been allocated before Congress even gavels into session.
In 2033, the Social Security trust fund will run dry and incoming payroll taxes will cover only 77 cents on every dollar promised to beneficiaries. In the same year, interest payments alone will total $1.8 trillion! Meanwhile, critical investments ranging from education to infrastructure will be squeezed ever smaller.
They argue that a way to shift the focus of policymakers away from the short term and more towards the long term is in how the budget is presented. They specifically tout the INFORM Act, which requires the Congressional Budget Office, Government Accountability Office, and Office of Management and Budget to incorporate longer-term fiscal gap and generational accounting analysis into their long-term outlooks. It also requires the CBO to do these calculations for bills they score that have an effect of 0.5 percent of GDP or greater over the next ten years.
We have stressed repeatedly that the long-term fiscal outlook is much more relevant than what happens in the near term. The INFORM Act is one way of putting the long-term outlook on equal footing with the current-year and ten-year projections that get attention today. Even though long-term projections are inherently more uncertain, they are what ultimately must be made to look sustainable so as not to unduly burden future generations.