Stern Releases Plan to Lower the Budget Deficit...and the "Investment Deficit"
Today, Andy Stern, a member of the Fiscal Commission, released the 21st Century Plan for America’s Leadership, a proposal to reduce the federal deficit while increasing the level of basic investment by the government in the long term. Comparable to the plan presented by the co-chairs of the Fiscal Commission, the Stern plan cuts and raises about $4 trillion by 2020, most of which is from cuts in discretionary spending. The plan also generates about $1 trillion by 2020 in revenue from changes to the current structure of tax expenditures and by reforming the income tax system.
Additionally, it introduces the “Invest in America Trust Fund,” a permanent fund beginning in 2015 that initially invests $75 billion in a range of long-term investments, such as infrastructure, education, and broadband access, with the amount increasing by 3% each year after that. According to Stern, this plan addresses not only the fiscal deficit but also the “investment deficit” in America, that, if corrected, can help our economy grow as much as a reduction in the budget deficit can. Stern proposes various ways to fund this investment, including a tax on internet gaming, closing the tax gap, or a short-term financial stock transfer fee.
CRFB commends Stern for his credible and well-thought-out plan, and his creative ideas to increase long-term investment in the U.S. at the same time. CRFB would like to see people get specific with ways to reduce the deficit, and Stern does an important service in pointing out the need to invest in future growth. His ideas are an important contribution to the discussion on how to balance fiscal consolidation with promoting economic growth. The more options on the table, the better.
But offering an individual plan for how one would ideally like to see deficits reduced and spending prioritized shouldn't stand in the way of also supporting another plan. All of the members who have agreed to vote for the Commission plan noted that it is not exactly what they want. Yet they recognized that everyone needs to compromise in the interest of achieving agreement on a much-needed plan to confront our fiscal challenge. CRFB hopes that Stern will support the Fiscal Commission's plan as well.