Inching Closer to a Debt Solution
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These days you need a scorecard to keep track of the various deficit and debt reduction plans being bandied about in Washington. In case you haven’t been paying close attention, here’s a quick recap. Toward the end of last year, the presidentially appointed, bipartisan National Commission on Fiscal Responsibility and Reform put forward a credible blueprint for long term deficit reduction. However, in February, the president essentially ignored his own commission’s recommendations when he released a budget proposal calling for more spending, higher taxes, and bigger government.
More recently, the House passed a long-term deficit reduction plan proposed by House Budget Committee Chairman Paul Ryan. It includes needed tax and entitlement reform. The details of Ryan’s plan can be debated, but at least it recognizes the seriousness of our unfolding debt crisis.
Pressured by Ryan’s plan, President Obama gave a speech essentially scrapping the budget he proposed in February in favor of greater deficit reduction, but his revised proposal remains heavy on tax increases and light on spending cuts and entitlement reform specifics. Adding to the debate are the ongoing negotiations among a bipartisan group of senators, the so-called Gang of Six, and the work of yet another deficit commission being led by Vice President Joe Biden.
The good news is that, though still lacking clarity and consensus, the debate on deficit reduction appears to be moving forward. The conversation has shifted from whether action must be taken to reduce the deficit to how and when it should be achieved. The debate will be long and rancorous and the outcome far from clear, but we should take some encouragement in the fact we are further along than we were a year ago, or even six months ago. The business community and the public must encourage our political leaders to remain at the table until they produce a deficit reduction plan that restores fiscal order while enabling economic growth.