Opinion: Biden's budget doesn't go far enough to tackle nation's ballooning debt
If there is no compromise between Democrats and Republicans, deficits and debt will inevitably rise on autopilot and the resulting interest costs will consume a larger and larger share of revenues.
President Biden’s budget is the opening move in what will likely be a contentious and protracted process.
While it is clear that the president’s heavy reliance on tax increases to achieve his deficit reduction goal is “dead on arrival” with Republicans on Capitol Hill, it is equally clear that a deficit reduction plan based entirely on spending cuts, as many Republicans have insisted on, would be dead on arrival at the White House and in the Senate.
If there is no compromise, deficits and debt will inevitably rise on autopilot and the resulting interest costs will consume a larger and larger share of revenues.
It is a measure of how deep our nation’s fiscal hole has become that a $2.8 trillion deficit reduction plan, even if it could be enacted, still leaves the debt rising substantially over the 10-year budget window, hitting a new record relative to the size of the economy in 2027 and continuing to set new records each year throughout the rest of the 10-year budget window (2033).
A deficit reduction plan at least twice as large as the president has proposed would be needed to stabilize the debt-to-GDP ratio. It is also noteworthy that even with the deficit reduction assumed in the budget, interest on the debt doubles from $661 billion in 2023 to $1.32 trillion in 2033.
Despite having urged Congress to “stand up for seniors” in the State of the Union address, the president has not included any proposals in the budget to avoid Social Security benefit cuts of up to 22 by 2033 when the program’s trust fund will be facing insolvency.
The president deserves credit for advancing a specific plan to bolster the Medicare Part A trust fund, which is also also facing near-term insolvency, but his plan partially relies on redirected resources and savings from one place in the budget to another. This kind of ‘reform’ does more to solve a bookkeeping problem than a total resources problem.
With the president having released his budget, the ball is now in the hands of Congress. They can draw guidance from the president’s proposals or entirely reject them. They must not, however, shirk their duty to break the escalating spiral of debt that threatens our nation’s future.
(The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating long-term responsible fiscal policy. It was founded in 1992 by the late former Sen. Paul Tsongas (D-Mass.), former Sen. Warren Rudman (R-N.H.), and former U.S. Secretary of Commerce Peter Peterson)