MY VIEW: Judd Gregg March 2013
Last week, the House Republicans and Senate Democrats put out their FY 2014 budgets, showing two different approaches to tackling deficit reduction. While there was clear divergence between the policies in the two budgets, both were able to put debt on a downward path as a share of the economy. If lawmakers can agree on that goal for deficit reduction, then the two sides may not be as far apart as it might appear.
Former Senator Judd Gregg (R-NH), a former Chairman of the Senate Budget Committee, writes in today's The Hill that if lawmakers look toward compromise, a deal to put the debt on a responsible path and replace sequestration may be in reach. Writes Gregg:
Debt reduction done right can actually strengthen the economy down the road. A recent analysis from the Congressional Budget Office found that a $2 trillion reduction in primary deficits could boost GNP by nearly 1 percent over 10 years.
The deal that can avoid this crisis is apparent and very doable.
Our fiscal problems will self-correct if our government reduces our deficits and debt over the next 10 years by at least an additional $2.4 trillion. Those reforms should also increase in their effectiveness beyond this 10-year window.
A sum of $2.4 trillion may seem like a great deal of money. But when one considers that it is off a base of approximately $40 trillion of spending over the next 10 years, it is definitely manageable.
What is the deal we need? It should obviously start with an agreement to replace the sequester with targeted and effective changes to federal fiscal policy.
The president has proposed a specific and significant action: changing the manner in which the federal cost of living adjustment (COLA) is calculated to make it more accurate.
In their latest framework, former Sen. Alan Simpson and former chief of staff to President Clinton, Erskine Bowles, have put forward $600 billion as a credible and bipartisan target for health savings over 10 years.
Of course, there is also the proposal for approximately $200 to $300 billion in entitlement savings that was reportedly agreed to between the president and the Speaker in the summer of 2011.
Take any permutation of these proposals, add in the CPI change proposed by the president known as “chained CPI,” and throw in a long-term adjustment in the eligibility age for Medicare and Social Security. You immediately have the spending side of a very strong package.
Comprehensive tax reform is also necessary. Reforming the tax code to lower rates and broaden the tax base will be both good for economy and our fiscal health.
Click here to read the full op-ed.
"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.