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Choosing the Nation’s Fiscal Future
place the budget on a sustainable path. To do so, the committee offers a framework that everyone can use to evaluate any proposed federal budget. Our framework of six tests can be used to hold leaders accountable for their proposed budgets:
Does the proposed budget include policy actions that start to reduce the deficit in the near future in order to reduce short-term borrowing and long-term interest costs?
Does the proposed budget put the government on a path to reduce the federal debt within a decade to a sustainable percentage of GDP? Given the fiscal outlook and the committee’s analysis of the many factors that affect economic outcomes, the committee believes that the lowest ratio that is economically manageable within a decade, as well as practically and politically feasible, is 60 percent.
Does the proposed budget align revenues and spending closely over the long term?
Does the proposed budget restrain health care cost growth and introduce changes now in the major entitlement programs and in other spending and tax policies that will have cumulative beneficial fiscal effects over time?
Does the budget include spending and revenue policies that are cost-effective and promote more efficient use of resources in both the public and private sectors?
Does the federal budget reflect a realistic assessment of the fiscal problems facing state and local governments?
The President and Congress share accountability for putting and keeping the federal budget on a sustainable path. The Office of Management and Budget and the Congressional Budget Office—as well as private organizations—can make major contributions to the needed reassessment of the nation’s fiscal course by regularly publishing projections of the long-term effects of the President’s budget and of major alternatives. Those projections can be used to assess the extent to which proposals are sustainable by the tests above.
The current federal budget process does not favor forward-looking assessment and management of the nation’s fiscal position. The committee finds that the present process gives too much weight to the interests of the current generation and too little weight to the interests of future generations. If the process is an obstacle to prompt correct action, then the first step in dealing with the fiscal challenge is to reform it.
The committee favors reforming the budget process to make it more far