We Must Not Backslide on Fiscal Responsibility Act
The bipartisan Fiscal Responsibility Act (FRA) enacted last month was projected to generate $1.5 trillion of deficit reduction – more than any legislation in nearly a dozen years. More recently there have been a number of efforts to add to the deficits – including efforts to circumvent the new discretionary caps, pass new and extended tax cuts, make changes to the state and local tax (SALT) deduction cap, and eliminate a provision to prevent double-dipping of Social Security benefits.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
The national debt is approaching record levels as a share of the economy, and interest costs are exploding. The Fiscal Responsibility Act made an important downpayment toward fixing the debt, but we cannot afford to undo this progress when so much more is still needed.
A number of fiscally irresponsible policies are currently being considered by Congress, including:
- New end-runs around discretionary caps – The FRA agreement already came with $500 billion of side deals, yet Senate appropriators are abusing the emergency designation to add $155 billion more. Those changes alone would shrink the FRA’s savings by more than two-fifths.
- New tax cuts – The Ways and Means Committee marked up about $1 trillion of tax cuts before the ink was even dry on the FRA. They kept the official costs down by letting the whole bill expire after two years – a budget gimmick as old as time – but the cuts would still cost twice as much as the FRA saved in the first two and a half years.
- The State and Local Tax (SALT) deduction cap – Some House members are advocating for lifting the SALT deduction cap with no suggestion for how to pay for it, a costly and regressive mistake that would undermine the budget and tax code all in one.
- Repealing Social Security’s Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) provision – WEP and GPO are meant to prevent double-dipping of Social Security benefits. WEP/GPO aren’t perfect, but repealing them without a replacement would make Social Security less fair, cost $150 billion over a decade, and advance Social Security’s insolvency date by about a year.
Adding these provisions together, Congress could end up cancelling out all of the FRA savings and then some, leaving us worse off than if we’d done nothing.
The FRA was a historic step when it comes to improving our fiscal outlook. But we’ll need at least $6 trillion more in savings to simply prevent the debt from growing faster than the economy. Congress must build on the FRA, not tear it down or spend its gains away.
Sometimes it feels like lawmakers just cannot help themselves – they see any chance to make the deficit worse, and they take it. They should resist the urge and instead build on the good work of the FRA, agreeing not to pass additional legislation that weakens the fiscal health of the country. Old habits die hard, but it is time to break the habit of borrowing for new legislation and passing the bills to our kids.
For more information, please contact Kim McIntyre, Director of Media Relations, at email@example.com.