MY VIEW: Michael Peterson
Michael Peterson, President and CEO of the Peter G. Peterson Foundation, writes in Politico that much of the coverage on the fiscal cliff has missed the real point. What the debate needs is a concrete target for debt reduction. He writes:
We hear many ambiguities like “fiscal sustainability,” “getting our fiscal house in order,” and “living within our means.” Even targets that seem specific, like “$4 trillion of deficit reduction over 10 years” are vulnerable to manipulation – much of the so-called “savings” can be meaningless if it is compared to a fictional baseline, such as one that projects future increases in spending in Afghanistan even though we are already drawing down forces.
Let’s put all of the rhetoric aside and agree on a clear fiscal goal: reducing our public debt to 60 percent of our GDP by 2030.
We've seen in the past that it is very easy to manipulate baselines and savings through budget gimmicks to come up with a certain amount of deficit reduction. But if lawmakers are willing to get serious about our fiscal problem, they should make the target a centerpiece of a fiscal cliff replacement framework. As Peterson says:
There’s no shortage of policy options to achieve 60 percent by ‘30. Many plans achieve meaningful deficit reduction within the 10-year budget window, but they must be coupled with structural reforms that ensure that we’re on the right trajectory thereafter.
And, assuming our elected leaders really want to solve the problem, it’s entirely possible to agree by the end of the year on a fiscal framework, combined with an expedited legislative process to enact and enforce legislation in 2013. A credible long-term fiscal plan that is agreed upon now, but implemented gradually, would not only put the nation on sound economic footing for the future, but would build the critically needed confidence that today’s economy so desperately needs.
Pretty soon, the fiscal cliff suspense will be over. This self-inflicted fiscal flashpoint has already hurt our fragile economy due to the uncertainty and fear it has imposed on businesses and consumers. On New Year’s Eve, someone will be toasting a political win. But will it be a victory for the country? That only comes once we have a long-term fiscal plan on target for 60 percent by ’30.
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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.