Develop Debt Reduction Plan Now, MacGuineas, Others Tell Congress
The nation's soaring federal debt can no longer be ignored and Congress and the president must develop comprehensive plans to avoid a looming fiscal crisis, budget experts, including CRFB President Maya MacGuineas, told the House Budget Committee Thursday. "What was once a long-term fiscal problem has become an immediate one," MacGuineas said during the panel's hearing on long-term deficits. "We no longer have time on our side." And she warned that "the economic risk of doing nothing is tremendous."
MacGuineas and other noted experts outlined fiscal goals and plans they believe would help wrestle the debt and the federal deficit under control. "There is no single right goal, MacGuineas said, in describing the Peterson-Pew Commission on Budget Reform's plan, "Red Ink Rising: A Call to Action to Stem the Mounting Federal Debt." The commission recommended last month that policymakers take immediate action to develop a specific package of ways to stabilize the debt at 60 percent of GDP by 2018. In 2012, policy changes would begin to be phased in. The plan must include triggers and enforcement mechanisms to ensure goals are met, MacGuineas said. In dealing with specific policies, MacGuineas said, "everything has to be on the table."
John Podesta, president and CEO of the Center for American Progress, agreed that a fiscal crisis could be on the horizon and policymakers must take action to return the nation to "fiscal sustainability." He said the Center believes the federal government should return to a balanced budget by 2020 and to ensure that total revenue equals total spending with the exception of debt service payments by 2014. He also agreed that enforcement mechanisms such as PAYGO are needed. Robert Greenstein, executive director of the Center on Budget and Policy Priorities, said Congress and the president should set a goal of bringing the deficit down to 3 percent of GDP. However, he warned that setting goals that are too ambitious would doom any deficit reduction plans. James C. Capretta, a fellow at the Ethics and Public Policy Center, warned that health care bills currently being considered by Congress costs too much. He advised policymakers to abandon the health bill and concentrate on a long-term budget plan.