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Choosing the Nation’s Fiscal Future
generations. The budget process needs to represent not only the interests and needs of the moment, but also those of the future. If the needs of today’s taxpayers are not properly balanced with those of tomorrow’s, future generations may suffer a loss in living standards and may have to contend with a severe economic crisis.
In this chapter the committee discusses a set of budget process reforms that would promote and sustain a new regime of more responsible budget stewardship. Specific reforms are proposed that would provide both policy makers and the public with a clear picture of the long-term implications of budget proposals, provide incentives for the President and Congress to act responsibly, and promote accountability for their actions or for their failure to act. Better process cannot provide political will, but it can reinforce the resolve of leaders who are prepared to face the long-term fiscal challenge and act as responsible stewards.
We offer what we believe are the essential elements of a reformed budget regime that focuses attention on the long-term challenge. In the next section we first provide the context with a brief discussion of the political challenge of instituting such reforms. The rest of the chapter presents the elements of a proposed new budget regime, one that would add information, set medium- and long-term fiscal goals, and enhance accountability by policy makers for meeting those goals.
THE POLITICAL CHALLENGE
Budgeting is always an exercise in hard choices. In any democracy, it is especially difficult to allocate fiscal sacrifice. The groups that benefit from specific tax and spending programs are almost always more organized than the general public that would benefit from responsible budget changes.
Tackling long-term fiscal challenges is even more daunting and politically challenging. Taking on programs that drive long-term deficits raises vexing challenges for the current generation of decision makers. Today’s voters must be convinced to make sacrifices in current consumption and promised government benefits in order to reduce the probability of a future crisis and to improve the living standards of the next and future generations.
Rather than facing the proverbial wolf at the door, taking on the nation’s long-term fiscal challenge is, as once suggested by Charles Schultze (former chair of the Council of Economic Advisers), more akin to dealing with the termites in the woodwork—a problem that is not immediately apparent but can bring the entire house down if not dealt with proactively. For example, if policy makers wait until the Social Security trust fund is insufficient to pay benefits, the federal deficit will already have grown to a level that will damage economic growth and saddle the budget with