Averting a Fiscal Crisis
Why America Needs Comprehensive Fiscal Reforms Now
-4%
-2%
0%
2%
4%
6%
8%
10%
12%1990-2012 :Average Deficit 3.1%
2012-2022 Average Current Policy Deficit: 5.0%
Deficit Projections
.Note: Estimates based on CBO, Alternative Fiscal Scenario
)Percent of GDP(
2
Likely Deficits
Current Law
19901992
19941996
19982000
20022004
20062008
20102012
20142016
20182020
2022
10%
12%
14%
16%
18%
20%
22%
24%
26%
Current Law Spending Current Law Revenues AFS Spending AFS Revenues
Gap Between Revenue and Spending)Percent of GDP(
Avg. Historical Spending (1972-2011): 21%
3
Avg. Historical Revenues (1972-2011): 18%
Surpluses Turning Into Growing Deficits…Spending and Revenues )Billions of Dollars(
4
Source: Congressional Budget Office, Alternative Fiscal Scenario
What Debt Is Likely to Reach
Revenues
Primary Spending
Interest
Deficit
RevenuesPrimary Spending
InterestDeficit
RevenuesPrimary Spending
Surplus
Interest
$2.0T $2.4T
$4.6T
$1.4T$860B
$5.1T
$1.1T
$220B
$3.3T
$236B$233B
$1.6T
2000 2012 2022
Interest Costs Will Reach $1 Trillion By 2024
Components of Revenue and SpendingRevenues and Financing Outlays
Total Outlays = $3.563 Trillion
2012
5
Total Revenues = $2.435 TrillionTotal Financing = $1.128 Trillion
Individual Income Tax27%
Corporate Tax5%
Social Insurance Taxes24%
Other6%
Borrowing32%
Medicare13%
Medicaid & Other Health
8%
Social Security22%
Other Mandatory16%
Defense19%
Non-Defense15%
Interest6%
Debt Projections
6
*Projections based on CRFB calculations of CBO Alternative Fiscal Scenario. Generally assumes current law, with the following exceptions: all expiring income and estate tax cuts and AMT patches are extended, scheduled cuts to Medicare physicians are waived, scheduled sequester cuts are waived, revenues and non-entitlement spending grow at the same rate as the economy after 2022, and cost saving measures from Affordable Care Act are only partially successful over the long-term.
Growing Entitlement Spending
7
1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 2050 2056 2062 2068 2074 20800%
5%
10%
15%
20%
25%
Social Security Health Care Other Entitlements Revenue
Historical Revenue Level
Actual Projected
)Percent of GDP(
Consequences of Debt
8
“Crowding Out” of private sector investment, leading to slower economic growth
Higher Interest Payments displacing other government priorities and investments
Intergenerational Inequity as future generations pay for current government spending
Unsustainable Promises of high spending and low taxes
Uncertain Environment for businesses to invest and households to plan
Eventual Fiscal Crisis if changes are not made
The Risk of Fiscal Crisis
9
“Rising Debt increases the likelihood of a fiscal crisis during which investors would lose confidence in the government's ability to manage its budget and the government would lose its ability to borrow at affordable rates.
-Doug Elmendorf, Director of the Congressional Budget Office
“Our national debt is our biggest national security threat.” -Admiral Mike Mullen )ret.(, Chairman of the Joint Chiefs of Staff
“One way or another, fiscal adjustments to stabilize the federal budget must occur … [if we don’t act in advance] the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.”
-Ben Bernanke, Chairman of the Federal Reserve
Debt Drivers
10
What the Debt Will Realistically Look Like
Short-Term Long-Term
Economic Crisis )lost revenue and increased spending on safety net programs like Food Stamps(
Economic Response )stimulus spending/tax breaks and financial sector rescue policies(
Tax Cuts )in 2001, 2003, and 2010(
War Spending )in Iraq and Afghanistan(
Rapid Health Care Cost Growth )causing Medicare and Medicaid costs to rise(
Population Aging )causing Social Security and Medicare costs to rise, and revenues to fall(
Growing Interest Costs )from continued debt accumulation(
Insufficient Revenue )to meet the costs of funding government(
Federal Spending and Revenues )Percent of GDP(
Growing Entitlement Spending
Note: Estimates based on CBO, Alternative Fiscal Scenario.11
19801985
19901995
20002005
20102015
20202025
20302035
20402045
20502055
20602065
20702075
2080
0%
10%
20%
30%
40%
50%
60%
70%
80%Actual Projected
RevenuesInterest
Health Care
Other Spending
Social Security
Why Is Federal Health Spending Increasing?
12
The Population Is Aging due to increased life expectancy and retirement of the baby boom generation, adding more beneficiaries to Medicare and Medicaid
Per Beneficiary Costs Are Growing faster than the economy in both the public and private sector. Causes of this excess cost growth include: Americans Are Unhealthy when compared to
populations in similar economies
Americans Are Wealthy and Willing to Pay More
Fragmentation and Complexity among insurers, providers, and consumers make normal market competition difficult
Incentives Are Backwards by hiding true costs of care through insurance and by hiding costs of insurance enrollment through employer sponsorship, incentivizing overspending
Health Care Spending by Country
13
Percent of GDP )2008(
36%
64%
Mexic
o
Turkey
Korea
Luxe
mbourgChile
Poland
Czech
Republic
HungaryIsr
ael
Slova
k Republic
Slove
nia
Finland
Norway
United Kingdom
Ireland
Spain
Italy
Sweden
New Zealand
Canada
Austria
Switz
erland
France
United St
ates
OECD Avera
ge0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Public Private
Source: 2008 Data from the Organization for Economic Cooperation and Development.
Number of Workers for Every Social Security Retiree is Falling
14
36%
64%
1950 1960 2012 2035
16:1 5:1 3:1 2:1
Source: 2012 Social Security Trustees Report.
Living Longer, Retiring Earlier
15
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
45
50
55
60
65
70
75
80
85Average Life Ex-
pectancy
Average Age of Retirement
Normal Retirement Age
Early Retirement Age
5 year gap13 year gap
Source: Social Security Administration, U.S. Census Bureau, and OECD. Figures show data for males.
Looming Social Security InsolvencySocial Security Costs and Revenues )Percent of GDP(
Source: 2012 Social Security Trustees Report.16
19701975
19801985
19901995
20002005
20102015
20202025
20302035
20402045
20502055
20602065
20702075
20802%
3%
4%
5%
6%
7%
Payable Benefits
Revenues
Scheduled Benefits
Interest as a Share of the Budget)Percent of GDP(
Note: Estimates based on CBO, Alternative Fiscal Scenario.17
Total Spending = 24% of GDP Total Spending = 32% of GDP Total Spending = 44% of GDP
2010 2030 2050
Interest6%
Primary Spending
94%Interest
21%
Primary Spending
79%Interest
37%
Primary Spending
63%
Insufficient Revenue
18
Unpaid for Tax Cuts in 2001, 2003, and 2010 lowered revenue collection without making corresponding spending cuts or tax increases to offset the budgetary effect
Spending in the Tax Code Costs Over $1 Trillion annually in lost revenues through so called "tax expenditures," which make the tax code more complicated, less efficient, and force higher rates
Excessive Spending Through the Tax Code )Tax Expenditures(
19
In order to stabilize Debt at 60% of the economy by 2021:Tax Expenditures as a Percent of Primary Spending if Included in the Budget
Large Tax Expenditures and Their 2011 Costs )billions(
Employer Health Insurance Exclusion $110
Special Rates on Dividends and Capital Gains
$91
Mortgage Interest Deduction $78
401)k(s and IRAs $60
Earned Income Tax Credit $60
Child Tax Credit $56
Charitable Deduction $30
Tax Expenditures24%
Health Spending17%
Other Mandatory12%
Social Secutity16%
Non-Defense Discretionary
14%
Defense Discre-tionary
15%
Source: Joint Committee on Taxation.
Corporate Tax Rates by Country
Note: Estimates based on 2010 data from the OECD and AEI.20
Austra
liaAus
tria
Belgium
Canad
aChil
e
Czech
Repub
licDen
mark
Finlan
dFra
nce
German
yGre
ece
Hunga
ryIre
land
Italy
Japan
Kore
aLu
xembo
urg
Mex
icoNeth
erlan
dsNor
wayPo
land
Portu
gal
Slova
k Rep
ublic
Spain
Swed
enSw
itzer
land
Turke
y
United
King
dom
United
State
s
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Average Effective Rate Marginal Rate
How Much Do We Need to Save?
21
In order to stabilize debt at 60% or 70% of the economy by 2022:
(2013-2022 Savings )
Current Law Baseline
Current Policy Baseline Assuming Upper-Income Tax
Cuts Expire*
Current Policy Baseline Assuming
All Tax Cuts Continued*
Debt in 2022 w/ No Savings (% GDP) 58% 77% 81%
Required Savings to Stabilize Debt at 70% n/a $1.7 Trillion $2.8 Trillion
Required Savings to Stabilize Debt at 60% n/a $4.2 Trillion $5.3 Trillion
*Estimates based on current policy baseline )2001/2003/2010 tax cuts extended, AMT patched, doc fixes, war costs decline, and sequester waived.
Setting the Record Straight
22
UPDATES TO SLIDEAusten/Fission:1( Think about visual way to integrate
messages2( Think about way to better phrase last line
in growth section
Notes for Maya:
To put debt on a downward path toward safe levels, we need at least $4 trillion in savings this decade.
We can't CUT our way out Eliminating Congressional salaries, foreign aid, and earmarks would reduce the deficit by only
4%. Balancing the budget through spending cuts alone would require cutting all spending by a third.
We can’t TAX our way out To fix the debt by increasing tax rates on EVERYONE, the bottom rate would have to rise from
10% to 16% and the top rate from 35% to 55%. To fix the debt by taxing families making over $250,000, the top rate would have to exceed
100%*.
We can’t GROW our way out Faster growth means more revenue, but also higher spending on entitlement programs. Fixing the debt with growth alone would require record-high growth rates every year.
We Need a Comprehensive Solution That Cuts Wasteful Spending, Reforms Entitlement Programs, and Raises Revenues*Data from the Tax Policy Center.
We Can’t Inflate or Grow Our Way Out
23
Inflation Growth
An unexpected increase in inflation could temporarily reduce the real value of debt and federal interest payments to investors
However, higher inflation would prompt investors to demand higher interest payments, increasing the costs of financing new debt
Higher inflation would also push up spending for all inflation-indexed programs, including Social Security, food stamps, military pensions, veterans’ benefits.
Strong economic growth is a necessary but not sufficient condition for debt reduction
Many spending programs grow as the economy does, and would outpace revenue growth Social Security payments would
increase as wages and, thus, benefits grew over time
Health care spending would grow even faster, given that costs continually grow notably faster than the overall economy
The levels of growth needed to significantly reduce medium-term debts would be way above historical norms
The Benefits of Debt Reduction Done Right
Stronger EconomyHigher wages and faster economic growth down the road
Improved Confidence and Certainty about the FutureMore hiring and investment
Lower Interest RatesHelping businesses and households to save and invest
Avert a FISCAL CRISIS!
24
Income per Person
Source: Congressional Budget Office, Long-Term Outlook 2012.
UPDATES TO SLIDE
Austen:1( MJ would like more of your creative input with this slide in particular
Notes for Maya:
2010 2014 2018 2022 2026 2030 2034$40K
$45K
$50K
$55K
$60K
$65K
Growing Debt Declining Debt
The average person will earn $9,000 a year less if we don’t fix the debt.
$9K
Debt Reduction and Economic Growth
25
CBO studied the economic impact of an illustrative $2.4 trillion debt reduction plan and found that real output would be between 0.6% and 1.4% higher, depending on the magnitude of the effects.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20211.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
CBO Baseline Growth Small Output EffectMedium Output Effect Large Output Effect
Real Output Growth )Percent(
*Estimates from CBO, “The Macroeconomic and Budgetary Effects of an Illustrative Policy for Reducing the Federal Budget Deficit.”
How to Reduce the Deficit
26
Domestic Discretionary Cuts
Defense Spending Cuts
Health Care Cost Containment
Social Security Reform
Other Spending Cuts
Tax Reform and Tax Expenditure
Cuts
Budget Process Reform
“Go Small”: Lots of Pain for Little Gain A smaller package would offer some
improvement to our fiscal situation, but it would not offer the benefits of a declining debt path
The public would see a package of tough choices and a debt burden that continues to grow. In essence, it would deliver political pain with not so much gain
Would leave in place considerable policy uncertainty, affecting businesses and markets
A smaller package and an incremental approach to debt reduction would not offer the political tradeoffs necessary to solve our fiscal challenges
27
What Could “Go Small” Look Like?
28
Possible Policy Changes Savings
Government-Wide $250 billion from chained CPI
Discretionary $100-200 billion from modestly slower growth in BCA caps
Health Care Negligible savings
Other Mandatory$150-250 billion from farm
subsidies, federal civilian and military retirement and benefits, Fannie and Freddie, and others
Social Security Negligible savings
Revenues Negligible savings
Net Interest $100 billionTotal $600-800 billion
Without addressing health care reforms or revenues, it will be very difficult to achieve significant savings
And even then, there is no guarantee that significant savings in other areas of the budget could be agreed on
Adding Serious Entitlement Reforms and Revenues Pushes You into “Go Big”
Democrats will only agree to serious entitlement reforms if there are revenues
Republicans will only agree to revenues in the context of comprehensive tax reform
Democrats will only agree to a comprehensive tax reform that replaces the Bush tax cuts if it raises at least the $800 billion they would get if President Obama vetoes extension of upper income tax cuts
Republicans will not agree to revenues anywhere near that amount without health savings that go beyond the amount proposed by the President
29
Advantages of “Go Big” Debt stabilized and falling as a share of
the economy later in the decade, and all the benefits associated with a declining debt burden:
Less “crowding out” of private sector investment
Stronger confidence in businesses and markets
Greater certainty and stability Stronger economy over the long-term Lower interest payments and increased
fiscal space Intergenerational equity Reduced or eliminated risk of fiscal
crisis
30
Advantages of “Go Big” (cont’d) Increased chances of enacting a
comprehensive debt solution of at least $3 - $4 trillion in savings:
Political trade offs necessary to address entitlement growth and revenues
Shared sacrifice in Go Big approach Realize the gains of debt reduction by
stabilizing and reducing the debt, and not just making difficult decisions that solve only part of the problem
Restore America’s faith in the political system
31
The Announcement Effect Just announcing the adoption of a debt reduction
plan can provide a boost in confidence, aiding the economic recovery today
Businesses and investors frequently cite the uncertainty over if and how the U.S. might control its debt trajectory when holding back on investment
Prominent lawmakers, government officials, economists, and experts have reiterated the benefits of the announcement effect, including:
Ben Bernanke, Fed Chairman The International Monetary Fund Glenn Hubbard, former Chair of the President’s CEA Mark Zandi, Chief Economist, Moody’s Analytics Michael Bloomberg, Mayor of New York City Alan Blinder, former Fed Vice Chairman Larry Summers, former Director, NEC
32
Note: For more information on the “announcement effect,” see CRFB at http://crfb.org/blogs/announcing-announcement-effect-club
“Go Big”: Shared Sacrifice Expanding the size and scope of a package can promote a sense of shared
sacrifice on behalf of the American public and key interest groups, making it more likely that they would accept changes if everyone was contributing to the solution.
An incremental approach would allow advocates for parts of the budget to argue that they are bearing an unfair burden. A Go Big approach which achieves savings in all parts of the budget neutralizes that argument.
In a Washington Post op-ed, Fiscal Commission co-chairs Erskine Bowles and Alan Simpson highlighted this lesson from the Fiscal Commission deliberations:
“The more comprehensive we made it, the easier our job became. The tougher our proposal, the more people came aboard. Commission members were willing to take on their sacred cows and fight special interests — but only if they saw others doing the same and if what they were voting for solved the country’s problems.”
33
The Bowles-Simpson Fiscal Commission Plan
34
Discretionary Spending Cuts to defense and non-defense programs,
totaling an additional $400 billion over ten years [on top of the savings already enacted].
Social Security Progressive benefit changes, retirement
age increase, tax increase for high earners totaling $300 billion.
Health Care Spending Cuts to providers, lawyers, drug companies, &
beneficiaries totaling $400 billion.
Other Mandatory Programs Reforms to farm, civilian/military retirement, &
other programs saving $290 billion.
Tax Reform and Revenue Comprehensive reform to lower tax rates,
broaden the base, and raise $1.2 trillion.
Is There a Smart Path Forward?Deficit Projections as a Percent of GDP
35
Note: Illustrative plan loosely based on Fiscal Commission savings. Current policy based on CRFB Realistic Baseline.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Current Law (CBO) Alternative Fiscal Scenario 9CBO)Illustrative Plan
Illustrative Tax Rates
36
Bottom Rates Middle Rates Top Rates Corporate Rate
Current Rates for 2012 10% 15% 25% 28% 33% 35% 35%
Scheduled Rates for 2013 15% 28% 31% 36% 39.6% 35%
Eliminate All Tax Expenditures 8% 14% 23% 26%
Keep Child Tax Credit and EITC 9% 15% 24% 26%
Fiscal Commission’s Illustrative Tax Plan 12% 22% 28% 28%
2012 Rates, Expiration of the Tax Cuts, and Fiscal Commission’s Illustrative Plan
Fiscal Commission’s illustrative tax plan would reduce or eliminate most tax expenditures and use the savings to reduce tax rates and reduce the deficit.
What’s in the Fiscal Cliff?
At the end of 2012, the following is scheduled to occur:
All of the 2001/2003/2010 tax cuts will expire at once The “sequester” will immediately cut defense by 10%, non-defense
discretionary by 8%, and other spending across-the-board The payroll tax holiday and extended unemployment benefits will
expire The AMT will hit 30 million taxpayers instead of 4 million All the tax extenders will expire Physicians will see a 30% cut in their Medicare payments Tax increases from the Affordable Care Act will begin The country will once again hit the debt ceiling
37
Components of the Fiscal Cliff
38
Note: Defense reduction would be closer to 10% when compared to spending levels enacted last year, but war spending and unobligated balances on net push this percentage down. In reality, sequester cuts in all categories will be larger for 2013 given that they will be applied over nine months instead of a full fiscal year.
Source: Congressional Budget Office and Office of Management and Budget. Numbers are rounded.
Enacted in the 2011 BCA to pressure the Super Committee to enact a plan, the sequester would cut spending across the board in January 2013.
The Sequester
% Reduction in 2013(Budget Authority)
2012-2022 Cuts(Budget Authority)
Defense Spending 9.4% $550 billion
Non-Defense Disc. Spending 8.2% $360 billion
Medicare 2% $125 billion
Other Non-Exempt Spending 7.6% $45 billion
Interest N/A $170 billion
Total Cuts +$100 billion $1,250 billion
Components of the Fiscal Cliff
39
Other Policies Set to Activate or Expire
Jobs Measures 2% payroll tax holiday Extended duration for unemployment benefits
Annual Doc Fixes
Affordable Care Act Tax Increases 0.9% increase in HI tax for higher earners and applying the full 3.8% tax to net
investment income 2.3% tax on medical devices Other measures
Various “Tax Extenders” R&E tax credit Alcohol fuel tax credit Subpart F for active financing income Other extenders
How Big Is the Fiscal Cliff?
40
Policy 2013 Fiscal
Impact
2013-2022 Fiscal Impact
2001/2003/2010 Income and Estate Tax Cuts $110 billion $4.3trillion
AMT Patches )w/ Tax Cut Interactions( $105 billion $1.7 trillionSequester $55 billion $1.1 trillionDoc Fixes $10 billion $280 billionJobs Measures $115 billion $150 billionVarious “Tax Extenders” $30 billion $455 billionTaxes from the Affordable Care Act $25 billion $420 billion
Total Fiscal Impact ~$450 billion $8.1 trillion
Total Economic Impact (% GDP) ~3% N/A
Note: Congressional Budget Office estimates and CRFB calculations. 2013-2022 estimates include interest.
Budgetary and Economic Impact in 2013
41
Billions of Dollars
36%
64%
Source: Congressional Budget Office estimates and rough CRFB calculations.
Short-Term Economic Impact of the Fiscal Cliff
Expiring/activating measures will create a “fiscal shock” of about 4 percent of GDP, which could take about 2 percent out of the economy in the short-term and increase the unemployment rate by over 1 percentage point
CBO projects that the economic impact of the fiscal cliff would send the economy into a double-dip recession next year
42
Source: Congressional Budget Office.
Long-Term Economic Impact of the Fiscal Cliff
The Fiscal Cliff could improve the long-term, BUT:
Savings in the Fiscal Cliff will not deal with the long-term debt drivers – growing health and retirement costs
Revenue will come largely from higher marginal rates, which will reduce incentives to work, save, and invest
Spending cuts will come from mindless across-the-board cuts instead of cuts to low-priority and anti-growth spending
43
Lawmakers Face a Fiscal Cliff and a Mountain of Debt
BAD CASE: A Fiscal CliffIf lawmakers allow all policy expirations and the sequester to proceed as scheduled, the economy could take a 2 percent hit next year, while not addressing entitlement spending growth or fundamental tax reform
WORST CASE: A Mountain of Debt If lawmakers waive or extend policies at the end of the year, they could add more than $8 trillion to the debt over the next ten years, compared to current law. Rising debt would reduce the size of the economy by about 1% later in the decade and by significantly more in future years
44
Is There a Smart Path Forward?
Instead of a Fiscal Cliff or Mountain of Debt, we should enact a comprehensive and thoughtful plan which would:
Go Big A plan must stabilize and reduce the debt relative to the economy A go big plan would make bipartisan compromise more likely by
allowing for the necessary tradeoffs
Go Smart Replace mindless, abrupt deficit reduction with thoughtful changes
that reform the tax code and cut low-priority spending
Go Long Enact gradual reforms that address the long-term costs of growing
entitlement spending
45
Benefits of Replacing the Fiscal Cliff with a Go Big Plan
Achieves long-term growth without short-term contraction
Avoids both a double-dip recession and a potential downgrade from credit rating agencies
Allows for sensible policy decisions to make the tax code more competitive, reform entitlement programs, and eliminate wasteful spending
Reduces market and public uncertainty over future tax and spending policies
46
What Savings Have Lawmakers Enacted So Far?
47
)Billions of Dollars through 2021(
Note: Simpson-Bowles figures represent original recommendations, updated based on baseline changes in Cooper-LaTourette proposal. Estimates based off of realistic budget projections.
Discre
tionary
Health Care
Social S
ecurit
y
Other S
pending
Revenue
Intere
st
Sequester
$0
$500
$1,000
$1,500
$2,000
$2,500
Simpson-Bowles RecommendationsEnacted Savings
The bipartisan Simpson-Bowles Commission recommended more than $4 trillion in deficit reduction
So far, policymakers have enacted $1.3 trillion in deficit reduction and $1 trillion in mindless across-the-board spending cuts
It’s Time for a Fiscal Reform Plan
48
Reasons to Enact a PlanSooner Rather than Later
Size of Adjustment to Close 25-year Fiscal Gap, Depending on Start Year )Percent of GDP(
Allows for gradual phase in Improves generational fairness Gives taxpayers businesses, and
entitlement beneficiaries time to plan
Creates “announcement effect” to improve growth
Reduces size of necessary adjustment
Source: Congressional Budget Office
2025
2020
2015
2013
0% 2% 4% 6% 8% 10% 12%
9.7%
6.8%
5.2%
4.8%
It’s Time for a Fiscal Reform Plan…Now
49
We Can’t Wait Until After the Election
Every month and year that passes, the debt grows larger and larger and the solutions become more difficult
Elections can take policy options off the table and back candidates into positions that make bipartisan solutions more difficult
Addressing the fiscal situation as soon as possible would make governing easier – not harder – after the election
Who Supports Fixing the Debt?
50
Calls for a $4+ Trillion, Bipartisan Solution to the Debt
47 Members of the Senate 102 Members of the House of Representatives 200 Business Groups, including the Chamber of Commerce, National
Association of Manufacturers, and Business Roundtable Other groups: Partnership for New York City, American Business
Conference, National Conference of State Legislatures 60+ former government officials, business leaders, and experts Editorial boards and other outside experts Over 170,000 concerned citizens
Principles of Fiscal Responsibility
51
For the 2012 Campaign
1. Make Deficit Reduction a Top Priority
2. Propose Specific Fiscal Targets
3. Recommend Specific Policies to Achieve the Targets
4. Do No Harm
5. Use Honest Numbers and Avoid Budget Gimmicks
6. Do Not Perpetuate Budget Myths
7. Do Not Attack Someone Else’s Plan Without Putting Forward an Alternative
8. Refrain from Pledges That Take Policies Off the Table
9. Propose Specific Solution for Social Security, Health Programs, and the Tax Code
10. Offer Solutions for Temporary and Expiring Policies
11. Encourage Congress to Come Up with a Budget Plan as Quickly as Possible
12. Remain Open to Bipartisan Compromise
Note: Principles as taken from CRFB’s U.S. BudgetWatch Project.
The Time For Action Is Now
52
“If not addressed, burgeoning deficits will eventually lead to a fiscal crisis, at which point the bond markets will force decisions upon us. If we do not act soon to reassure the markets, the risk of a crisis will increase, and the options available to avert or remedy the crisis will both narrow and become more stringent.”
- Erskine Bowles and Sen. Alan Simpson, Former co-chairs of the National Commission on Fiscal Responsibility and Reform
Useful Resources
The Committee for a Responsible Federal Budgethttp://crfb.org
The Campaign to Fix the Debthttp://www.fixthedebt.org
Policy Papers:Between a Mountain of Debt and a Fiscal Cliff
Primary Numbers: The GOP CandidatesGoing Big Could Improve the Chances of Success
Congressional Budget OfficeJuly 16, 2011 report: The Macroeconomic and Budgetary Effects of an
Illustrative Policy for Reducing the Federal Budget Deficit
53