Monday, June 05, 2023

The Fiscal Responsibility Act Builds Momentum on Needed Deficit Reduction

From Committee for a Responsible Federal Budget, JUN 5, 2023 - The President signed the Fiscal Responsibility Act on June 3rd, legislation to suspend the debt ceiling, limit discretionary spending, and generate $1 to $2 trillion of deficit reduction. The bill passed with the support of 314 members of the House and 63 members of the Senate – gaining more total votes than any major deficit reduction bill in the last quarter century.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

The Committee for Responsible Federal Budget applauds enactment of the Fiscal Responsibility Act, and encourages Congress to build on the momentum of the deal to address the root causes of our unsustainable debt.

The FRA will both avoid default and generate desperately-needed budget savings. And importantly, it did so through bipartisan compromise, demonstrating that the parties can work together for the common good.

The FRA is the largest deficit reduction bill in well over a decade, and it passed with support from both parties.

Given the huge fiscal hole we are in, it isn’t likely that any one package would be able to fix the situation entirely. It would take $8 trillion in savings merely to stabilize the debt relative to the economy over the next decade. The FRA is likely to generate at least $1 trillion in savings, and could save as much as twice that if appropriators take its targets seriously. That’s a very good starting point; now more work will be needed.

Policymakers should pivot to focus on larger structural reforms. They need to address all areas of the budget, slow health care cost growth, and prevent the impending insolvency of Social Security and Medicare. And they need to go after tax breaks and put revenue on the table, as there is no way to fix this problem on the spending side alone.

Lawmakers should also reform the budget process, which is clearly a total disaster – as illustrated by the fact that neither of the Budget Committees have yet to put forth budgets and that Congress has failed to pass a budget on time for 20 years now. And they should reform the debt ceiling so that it works to prevent unnecessary borrowing rather than stopping the government from paying its bills.

A bipartisan fiscal commission is likely the best way to achieve these goals. These types of commissions don’t replace the need for political will, but they give the parties a helpful venue to negotiate in good faith.

The Committee for a Responsible Federal Budget congratulates Congress and the President for passing the Fiscal Responsibility Act and encourages them to build on the success by enacting additional deficit reduction and establishing a comprehensive and bipartisan fiscal commission.

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