A frequent review of the fiscal targets would allow the problem to be addressed iteratively, in politically manageable bites. The target may need to be adjusted and phased in over the near term, for instance, to avoid precipitous fiscal actions that might jeopardize the economic recovery. In such major policy areas as health care, progress will in all likelihood proceed in iterative stages. Thus, although the next budget offered by the President or approved by Congress will likely not contain sufficient specific proposals to eliminate the excess growth of health costs, it could include actions to make progress to that end and make a commitment to continue to address the problem in the long run.
In the United States, assuming that inflation remains under control, annual deficits that average around 2 percent of GDP would be consistent with maintaining a debt-to-GDP ratio of 60 percent. As discussed in preceding chapters, simply meeting a 2 percent deficit target will become more fiscally ambitious over time unless actions are taken to modify the growth paths of the major entitlement programs or to adjust tax revenues—the key drivers of the long-term outlook.
Medium- and long-term fiscal targets could be established in the annual congressional budget resolution and then used to assess both the President’s budget and the congressional policy actions. The budget resolution and accompanying committee reports would have to explicitly address the nature of the policy actions that Congress will take to achieve the debt target over the next 10 and 20 years. CBO could be required to review this section and provide its own estimate of the impact of these proposed policies on the debt target. A new congressional procedure (point of order) could be considered to reinforce the establishment of debt targets in the budget resolution.
CBO’s report also could assess the implications of these policy changes on the long-term outlook over the next 50 years. Although budget resolutions may not provide sufficient detail to generate detailed estimates over the long term, a report that provided even some assessment of the budget resolution’s impact on the long-term target would provide useful insights. Such a report could, at a minimum, assess whether the budget resolution would make the long-term outlook better or worse.
Fiscal targets and goals are not self-enforcing. Rather, a framework is necessary to hold leaders accountable for meeting targets. As difficult as reaching agreement on targets might be, sustaining commitment over time is even more difficult.
The accountability framework the committee proposes has four elements. First, it would require the President to provide an accounting of the