Let's Go Big

In case you missed it yesterday afternoon, CRFB put out its expectations for the Super Committee, urging them to Go Big! Given the severity of our debt challenge, enacting only $1.5 trillion savings over the next ten years is not enough. Compared to our Realistic Baseline, this amount would keep debt on an upward path relative to the economy, both over the medium-term and the long-term. 

So, what should the Committee do? Of course! it should exceed its mandate! Getting a $3 trillion to $4 trillion plan with legitimate savings would stabilize our debt in the medium-term and put it on a downward path. We also urged the Super Committee to Go Long, focusing on our long-term debt drivers, namely health care and retirement spending, even if some of those policies would have small deficit effects in the first decade. Focusing on the long-term is part of the statutory language of the Committee's mandate, so it should not be ignored.

We have also suggested that reducing the deficit is not just a counting exercise; it must also Go Smart in a way that focuses on economic growth, which is what CRFB president Maya MacGuineas reiterated today in an op-ed in The Hill:

"...done right, a smart debt-reduction plan is absolutely central to an economic-growth agenda...One benefit of a medium-term plan is that it can leave room upfront for the economic recovery to continue to take hold... The way to focus on the real drivers of the budget problem and the real keys to growth is for the super committee to choose to go big and tackle all these issues in one large deal."

In the short term, deficit-reducing policies should be phased in gradually to avoid harming the recovery. For long-term growth prospects, the Commitee should tackle tax reform that broadens the tax base and lowers rates. Also, it should consider reprioritizing spending to focus more on the investment elements of the budget.

Finally, we also urge the Super Committee to Go Honest by not relying on budget gimmicks and to Make It Stick  to reinforce savings once they are in place.

The perfect time for fiscal reform is now. The longer policymakers wait, the harder it becomes--both economically and politically.