Tomorrow, the National Commission on Fiscal Responsibility and Reform will have its second meeting. The Fiscal Commission's stated goal is to identify policies that will reduce the federal deficit to about 3% of GDP by 2015. Given that our 2009 deficit was about 9.9% of GDP, we have a long way to go. So how can we get down to 3%?
The bad news? Taxpayers should be concerned about tax increases in the future: as our friends at SAFE mention, "(1) there are more liberals than conservatives on the FC, (2) discretionary spending cuts are being ruled out in the short term based on nervousness about chilling economic recovery, and (3) changes to entitlements would take years to phase in. This could leave tax increases as the indicated way to cut the deficit to 3% of GDP by 2015..."
It doesn't have to be this way, though. Our growing long-term budget deficits are largely the result of burgeoning spending, not falling tax revenues. We must address the current unsustainability of entitlement programs like Medicare, Medicaid, and Social Security. Reforming these programs and reducing the deficit to about 3% of GDP without increasing the tax burden is possible and will require spending cuts, as noted by one the commissioners. The question is whether the commission will settle on the least onerous solution for taxpayers. The good news? You can have your say. In an effort to increase transparency and accountability, the Fiscal Commission accepts comments via email. Let them know that spending needs to be cut and that taxes don't need to be increased!