Establishing Goals and Demolishing Myths
Last week CRFB provided Ten Questions to Ask the Candidates on fiscal policy as a way to help voters gauge how serious a candidate truly is regarding fiscal responsibility. While the federal budget deficit has been prominently featured during this election season, it has been little more than a talking point for most candidates as they have avoided discussing specifics. In the run up to Election Day The Bottom Line will highlight these questions in a blog series to move beyond the campaign rhetoric towards discussing potential solutions. This blog post covers the first two questions.
1. Picking a Fiscal Goal. Do you believe the country has a serious fiscal problem? If so, do you think the country needs a “fiscal goal?” What particular fiscal goal would you support? The current fiscal path is unsustainable. Public debt is on course to pass 100% of GDP in the 2020s and 500% in the 2080s. The Peterson-Pew Commission on Budget Reform has argued for a fiscal goal of 60% debt-GDP by 2018 to reassure credit markets that the United States is on course to gradually bring its debt back to sustainable levels.
It’s difficult to measure our progress towards fiscal sustainability if we don’t have benchmarks guiding us. We discussed the merits of setting a fiscal target here. It’s not enough for a candidate to simply say they will reduce the deficit and cut federal spending; having a goal indicates that a candidate is serious about addressing our fiscal challenges. We don’t suggest that the 60 percent debt-GDP target is the only viable goal, but we need to establish a credible, yet ambitious, goal now.
2. Going Beyond the Budget Myths. Eliminating waste, fraud, abuse, earmarks, and tax evasion will not solve our fiscal problem. What other specific cuts are you willing to accept? Yes, wasteful government spending should be eliminated, earmarks are bad process, and we should collect all the taxes that are owed—thereby closing the “tax gap.” But that is not enough. The largest drivers of the debt are aging, growing health care costs, and the imbalances between how much we spend and what we pay in taxes. It is hard to imagine a credible budget plan that does not include changes to these areas of the budget as well as defense, domestic discretionary spending…and…well, pretty much all areas of the budget.
Candidates often fall back on these items when asked to name the budget issues they will address. While these low-hanging fruit should be picked, much more will need to be done to address our fiscal imbalances. Defense and security, entitlements, and interest on our debt account for roughly two-thirds of our budget as opposed to the old stand-bys such as waste, fraud and abuse, which represent only a tiny fraction.
Candidates must get specific! We offer some ideas in our new Lets’ Get Specific series of papers. We've already looked at Social Security, Health Care, and Tax Expenditures. Doing our “Stabilize the Debt” online budget simulator can also help in determining the magnitude of the changes we must make to reach the goal and put us on a sustainable fiscal course.