Deficit Reduction Through Reconciliation Would Be Great News
Policymakers are apparently considering developing a new reconciliation package that would focus in part on deficit reduction. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Conversation about a deficit reduction package is encouraging and appropriate given our strong economy, massive debt, and soaring inflation. Borrowing earlier in the pandemic made sense but borrowing more now would be recklessly throwing fuel on the fire. We are already projected to have a $1.2 trillion deficit this year without any new borrowing.
The House-passed Build Back Better Act included almost $2 trillion of revenue and drug savings, and a lot more can be raised from additional efforts to lower health care costs, price carbon, and reform the tax code. That's more than enough money to fund the highest priorities in Build Back Better and make a substantial down payment on addressing our nation's long-term fiscal challenges.
Smart deficit reduction can also help the Federal Reserve bring inflation back under control by lowering health care costs and reducing over-heating in the economy. Today's high inflation is driving up living costs and undermining some of the gains from the economic recovery; policymakers need to start taking it seriously.
Ultimately, both parties are going to need to come together to enact broader reforms to restore solvency to our major trust funds and bring our massive debt down. Using reconciliation to begin that process would be a tremendous step in the right direction in putting our nation on sound fiscal footing.
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