The recent bipartisan budget accord in Washington merely postpones the difficult decisions needed to place the United States on a sustainable fiscal footing, the Executive Director of the Concord Coalition said this morning.
Robert Bixby urged 200 people at the AIM Executive Forum to demand that politicians address the ticking budgetary time bomb that sits under the nation’s financial future. It is a time bomb, he said, driven largely by automatic spending increases embedded in the budget by decades of short-term policy decisions.
Those spending increases, combined with expected increases in interest rates on the federal debt, Bixby said, threaten to overwhelm the ability of government to provide the day-to-day services upon which citizens rely.
“It’s running on autopilot and anything you do to address it is politically toxic,” said Bixby, who has headed the Concord Coalition for the past 15 years.
Bixby said that the federal government has historically spent at a level equal to 20 percent of gross domestic product while generating tax revenue at 17 percent of GDP. That level of deficit is at least sustainable with normal economic growth, but Bixby said that the gap between spending and revenue is projected to increase to as much as 4.5 percent of GDP during the next 15 years.
The challenge for policymakers, according to Bixby, is that 60 percent of the federal budget is now consumed by required, automatic expenditures such as social security, Medicare and Medicaid. The cost of those programs is projected to grow faster than the economy. Interest on the debt, meanwhile, is projected to rise from just over $200 billion this year to more than $800 billion in 2024.
“The laws enacted years ago are now driving the federal deficit,” Bixby said.
The bottom line, he continued, is that Congress will not solve the fiscal crisis simply by cutting defense or non-defense discretionary spending. He believes that all issues must be open to negotiation, including a broadening of the tax base coupled with an examination of popular tax deductions for items such as mortgage interest and employer contributions to health insurance.
The budget accord negotiated by Republican Representative Paul Ryan and Washington Senator Patty Murray essentially placed any serious debate about the budget gap on the back burner until after the presidential election of 2016.
“They set out to do a deal that did not do much, and they succeeded,” Bixby quipped.
Bixby served as a member of the Bipartisan Policy Center’s Debt Reduction Task Force (the Domenici-Rivlin commission), which produced a model plan for comprehensive fiscal reform. He frequently speaks around the country on the nation’s fiscal challenges and possible bipartisan solutions, including greater government efficiency, tax reform and improvements in the entitlement program.