As posted on Fix the Debt: We celebrated President’s Day on Monday, a time for reflecting on the power of presidents to lead the way and shape the debate. We need that kind of leadership now as important decisions regarding the federal budget are about to be made.
President Obama’s recent budget proposal provides some good examples to follow, but also has more to be desired in other areas.
On the positive side, the president should be lauded for paying for all new initiatives in the budget. Some proposals, like universal preschool, have offsets explicitly linked to them while others are not specifically paired with a pay-for, but savings are identified elsewhere that could cover the costs. Congress should follow this example of abiding by “pay-as-you-go” (PAYGO) principles as new policies are considered.
In addition, the budget includes some deficit reduction beyond the savings to be used to pay for new initiatives. However,the budget only saves about half of what the White House claims, roughly $930 billion. While the savings are significant, much more will be required. Contrary to what a White House spokesman said, the budget does not meet the targets set by Simpson-Bowles.
The budget also misses an opportunity to seriously address the longer-term fiscal challenges. It claims to stabilize the debt at about 74% of the economy, but that relies on some assumptions that may be optimistic. Even if the assumptions hold up, debt will remain well above the historical average of about 40% of GDP. Fix the Debt, and others, faulted the budget for failing to adequately address the drivers of the debt going forward and not drawing attention to the need to bring the debt down.
In a Wall Street Journal column, Grep Ip asks if it is time to start thinking about instituting more aggressive deficit reduction now that the economy is improving. The president should be leading the discussion instead of avoiding it.
Colorado small business leader and Fix the Debt citizen-activist Jeff Wasden shares the wisdom of some past presidents in the Colorado Statesman. He writes that “President Obama needs to devote part of his final years as POTUS to reducing the burden of debt on this and future generations.”
See the president’s budget in charts.
Check out highlights of the president’s budget.