Fiscal Responsibility

January 5 - In today's Washington Post, Senate Budget Committee Chairman Kent Conrad and Ranking Member Judd Gregg called on Congress to combine the passage of expected stimulus legislation with a "bipartisan commitment to begin addressing the long-term budget challenges confronting our nation." 

Noting that stimulus paid for through deficit spending is both necessary and appropriate at the present time, Conrad and Gregg said that to avoid the next economic crisis, the Congress must address long-term fiscal imbalances sooner rather than later.

"By acting now, we can make difficult but gradual changes to bend the cost curves of entitlement programs that will otherwise overwhelm our budget, as well as make needed reforms to our out-of-date and inefficient tax code. The longer we put off these reforms, the more draconian our choices will become and the more likely they are to be forced upon us."

December 22 - In a recent paper, Heritage Foundation fellows Brian M. Riedl and Alison Acosta Fraser propose a number of policy steps the new administration could take in order to follow through on President-elect Obama's promise to rein in government spending. They point out that reducing government spending will require political effort, because while many presidential candidates plan to cut spending, few are successful, claiming:

"Virrtually all Presidents promise to rein in spending, but few succeed because every dollar of government spending--no matter how wasteful--will be strongly defended by its recipient as well as by the lawmakers who annually fund that spending. Thus, for you to restrain spending, you must not only identify lower-priority spending, but also spend political capital to enact your proposed reforms."

The authors write that scaling back planned stimulus plans would be a strong first step toward fulfilling the promise. Among their other proposals are defining more fully what a "net spending cut" means, devolving more programs to state and local governments, eliminating corporate welfare programs, enacting effective pay-as-you-go rules, cutting farm subsidies, reforming entitlement spending and eliminating "pork" projects from the federal budget. Finally, Riedl and Fraser urge Obama to avoid budgetary gimmicks, noting that declaring spending "emergency" distorts the actual federal budget totals.

December 16 - Following the release of a Treasury document detailing $56 trillion in unfunded government liabilities, Representative Jim Cooper (D-TN) reiterated his support for a commission examining the long-term fiscal health of the federal government. The Treasury's Financial Report of the United States for 2008 showed trillions of dollars in unfunded liabilities for entitlement programs such as Social Security ($17 trillion) and Medicare ($32 trillion).

Maya MacGuineas, President of The Committee for a Responsible Federal Budget, called for a reform of entitlement programs, and warned that without such reforms "it's out of the frying pan and into the fire."

November 26 - In a CRFB press release issued today regarding potential stimulus packages, the committee recommends that any stimulus should include a credible mechanism for paying back debt generated after the economy recovers. CRFB acknowledges that the U.S. is in serious economic difficulty and another stimulus may be necessary, but cautions policymakers to account for the long-term danger that massive public debt poses by weakening the economy or even causing economic crisis. An excerpt of the release from CRFB President Maya MacGuineas:

"Politicians will be offering policies they were supporting before the downturn by calling them 'stimulus' now...One of the real tests will be if we are willing to cover the costs of all these stimulus measures once the economy can afford to. If we don't, we run the risk that the next economic crisis will be as a result of the trillions of dollars in new government debt we are racking up."