CRFB President Participates in Center for American Progress Event: "Is It Time to Hit the Reset Button on the Fiscal Debate?"
Today, the Center for American Progress (CAP) hosted a panel discussion featuring Center on Budget and Policy Priorities Senior Fellow Jared Bernstein, CAP President Neera Tanden, Concord Coalition Executive Director Robert Bixby, and President of the Committee for a Responsible Federal Budget Maya MacGuineas.
As a follow up to the Center for American Progress's paper by the same name (that we have responded to here, here, and here) -- which suggested that short-term improvements in budget projections could allow lawmakers to put aside deficit reduction for the next couple of years -- the participants gathered to discuss and debate the urgency of dealing with the national debt, the effectiveness of current policies, and what they believe our future should hold. Although each panelist had different perspectives, they all agreed that policy changes must ultimately be made to create a long-term, fiscally sustainable future.
CRFB President Maya MacGuineas began by explaining the necessity for long-term solutions. She argued that recent deficit reduction measures, most notably the sequester, have not changed our long-term debt outlook as they focus almost exclusively on discretionary spending, a category of spending that is not a key driver of the country's long-term debt. She argued that much more work is needed before the debt is put on a sustainable long-term path, and that true fiscal sustainability will only be achieved when policymakers address the structural drivers of debt including health care, population aging and the tax code.
By enacting such long-term oriented reform, she explained, not only will we begin accumulating savings today, but many of the savings associated with these policies (the chained CPI, for one) will compound in the medium and long run. Furthermore, many of the long-term policies produce little savings in the first few years, making them much better than frontloaded approaches like sequestration. Moreover, MacGuineas showed that although the recovering economy has resulted in lower deficits, our long-term problems are far from solved. Many structural problems that existed before the recession continue to threaten our economy today. It is not the current deficits that are the problem, she concluded, but the ballooning debt that threatens our economy if we choose not to act.
In regards to the other outstanding panelists, Bixby echoed and reinforced very similar concerns, placing an emphasis on the structural problems that continue to exist in many of our institutions while both Tanden and Bernstein had a different focus. Tanden noted that the Center for American Progress had put out many plans to address our long-term debt problem but did not believe a compromise could be acheived with Republicans. Bernstein, while concerned about the long-term outlook was more concerned with the negative affects associated with the policies currently in place - especially sequestration. They both argued that the administration's number one concern should be the current economic weakness, with Bernstein asking not whether our short-term deficits are too big, "but whether they are big enough?"
Despite the differences in opinion, in the final minutes of the discussion, MacGuineas asked the other panelists whether, disregarding politics, they would support long-term deficit reduction along with Social Security, Medicare, and tax code reform. They all answered "yes". This response suggests that securing a sustainable fiscal future is not necessarily the biggest source of disagreement. Instead, it is a question of whether Congress can achieve while aiding short-term economic growth. Neither Tanden nor Bernstein were against long-term deficit reduction and reform, but they did not believe that Congress had what Bernstein called the "political oxygen" to deal with both issues simultaneously. Yet, with continued progress on tax reform and increasing pressure for longer-term entitlement reforms -- with both policies being talked about as replacements for the sequester -- the policy foundation is there for Congress to do just that.