MY VIEW: David Walker December 2012
Former U.S. Comptroller General David Walker writes in today's Politico that not all of the attention should be on the upcoming fiscal cliff - we also need to take a serious look at our medium and long term debt problem. A deal could address the long term drivers of debt while minimizing damage to our recovering economy. Walker writes:
When is a fiscal deal different from a Grand Bargain? When we talk about the solutions to two important and related challenges that we face — the fast approaching fiscal cliff and the even more devastating fiscal abyss that looms ahead due to our projected structural deficits.
The nation’s media and our federal elected officials are currently focused on the fiscal cliff that, unless avoided through a negotiated deal by the end of the year, will trigger dramatic spending cuts and tax increases that could push the nation back into recession. If Congress and the White House send us over the cliff by failing to reach an agreement, it will be a shameful triumph of politics over the public interest for which our elected officials should be held accountable.
But avoiding the cliff must not be our only objective — not when we also face huge structural deficits and mounting debt burdens in coming years that threaten the future of our country and families. What we need to see over the next three weeks is a deal that averts the fiscal cliff and builds a bridge to achieving a fiscal Grand Bargain in 2013 that will help ensure we do not fall into the abyss.
What we need in order to address this fiscal abyss is a Grand Bargain that addresses the two main drivers of our structural deficits: unsustainable social insurance programs, especially health care programs, and a complex, unfair, uncompetitive and inadequate tax system. But a lame duck Congress cannot and should not tackle comprehensive tax and social insurance reforms. It will take dedicated effort in 2013 from the new Congress and its responsible committees, as well as a non-partisan public education initiative sanctioned by the White House, and private discussions with key bipartisan leaders to forge such a bargain.
Walker sees an agreement on a downpayment as necessary to repeal most of the fiscal cliff without sending the message to the public and the markets that Washington is not serious about dealing with our debt. We can defer some of the enforcement mechanisms until the end of 2013 to give Congress time to agree to a deal. Walker adds criteria to judge whether that final plan is adequate:
There are two other critical considerations — and that is what the goal should be for a Grand Bargain and what type of fail-safe should be triggered if agreement is not reached by the stated dated. Some see this goal as a certain amount of deficit reduction. But this is a poor criterion because budget baselines are so easily manipulated. Instead, I suggest the goal should be to enact legislation that would reduce debt as a percentage of the economy to 60 percent by 2024, with specified spending reduction and revenue increase targets and appropriate interim milestones. In addition, if a deal is not reached by the stated date, then a predetermined ratio of temporary tax surcharges and spending reductions to both mandatory and discretionary spending could occur to hit the milestone target.
We can avoid the fiscal cliff in 2012 and achieve a Grand Bargain in 2013 if the American people demand leadership as well as constructive and principle-based compromise from our elected officials in both political parties. The stakes are high and the risks very real, and yet the rewards will be great if we are successful. It’s time for results not rhetoric.
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"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.