A Debt Strategy For The Next 30 Years
The United States is on an unsustainable
fiscal course. This year marks the fourth in a row that the U.S. federal
deficit will exceed $1.1 trillion. Since the end of 2007, the federal
debt, now $11 trillion, has doubled as a share of annual GDP—from 36% to
73%. The long-term outlook is even worse.
The
deficit is likely to improve in the next few years, but it will then
turn upward again due to the projected rise in federal spending on
Medicare and Social Security. According to the Congressional Budget
Office (CBO), spending on those two programs will rise from 8.7% to
12.2% of GDP by 2037.
The good news is
that U.S. lawmakers and policy experts from across the political
spectrum have begun in earnest to outline possible strategies for
tackling this looming debt crisis. Unsurprisingly, many suggestions—from
the Left and the Right—are misguided or not particularly constructive.
For example, a number of left-leaning think tanks have recently
supported a “financial transactions” tax that would cause huge
distortions, raise far less revenue than projected, and push more of the
industry offshore. Similarly unhelpful, some conservative groups have
advocated abolishing various small spending programs on the grounds that
such cuts will improve the fiscal outlook, even though their
elimination would have only a trivial impact on the overall federal
budget.
Given the plethora of ideas
being floated, it is critical that policymakers—both liberal and
conservative—zero in on a framework that effectively addresses our
fiscal challenges and permits specific policies to be properly
evaluated. Outlined below are three key principles that are essential to
this endeavor and offer concrete policy applications based on these
principles.
First let’s provide some context for understanding the size
of the problem.
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Read more: ncf.uschamber.com
