How Would You Balance the Budget?
Put yourself in Congress' shoes: What sacrifices would you make to balance the budget?
In the coming months, candidates for federal office will offer many ambitious proposals. Some will argue for more spending and higher taxes. Some will argue for less spending and lower taxes. Some may even argue for higher spending and lower taxes. No matter what they promise, all of them will come up against some difficult math if they are elected.
While rarely mentioned on the campaign trail, the federal budget is on an unsustainable path. The annual deficit, the amount by which spending exceeds revenues, climbed to $984 billion in 2019. According to the nonpartisan Congressional Budget Office (CBO), the deficit is headed for $1 trillion in 2020 and $1.4 trillion in 2029.
Measured as a share of the economy (GDP), a more relevant number than dollar figures alone, deficits are projected to average 4.7 percent over the next 10 years. That would be a substantial increase from the average level of deficits over the past 50 years (2.9 percent of GDP).
These deficits are the product of policies that grow spending faster than revenues and the economy. Most of the spending growth is driven by retirement and health care programs, which grow automatically with an aging population and rising health care costs.
Federal revenues are expected to grow as well but not by enough to keep pace with projected spending. Revenues are constrained by tax breaks (exclusions, deductions, credits, etc.) which CBO estimates total roughly $1.6 trillion per year.
Federal debt held by the public is projected to grow from 79 percent of GDP in 2019 to 95 percent in 2029, the highest level since 1946 (106 percent of GDP) and more than twice the average over the past 50 years (42 percent of GDP).
Beyond the next 10 years, CBO projects that the debt will continue rising faster than the economy. This debt growth will push up interest payments, damage the economy, undermine our standard of living, and leave our children and future generations worse off. Procrastination only makes the problems more difficult to address. The sooner we deal with them, the better.
This debt growth will push up interest payments, damage the economy, undermine our standard of living, and leave our children and future generations worse off. Procrastination only makes the problems more difficult to address.
During election years, voters have a right and a responsibility to ask the candidates what they would do to put the nation on a more responsible fiscal path.
But what would you do?
What are your priorities? What trade-offs are you willing to make, and how would it all add-up?
To get some answers, you can take the Concord Coalition’s online Federal Budget Challenge. You’ll be able to choose from a range of options, all scored by the Congressional Budget Office. There are options to cut spending, increase spending, cut taxes, or increase taxes. There are an infinite number of options and variations, so the choices are limited to a representative sample. They will, however, give you a sense of proportion on both the magnitude of the problem and the extent to which various options can help close the gap.
The Challenge allows you to make your own choices. But when you finish, wherever you come out, ask yourself how much more difficult it would be if you had to negotiate these options with other people who have different priorities and how you would explain your choices to potentially angry constituents.
Good luck, and have fun with it!
But when you finish... ask yourself how much more difficult it would be if you had to negotiate these options with other people who have different priorities and how you would explain your choices to potentially angry constituents.