Today Michael Ettlinger, Michael Linden, and Lauren D. Bazel are releasing CAP’s long-term deficit vision. They call for the government to stabilize the debt-to-GDP ratio by 2014 and achieve a balanced budget by 2020. The goal would look something like this:
The Committee for a Responsible Federal Budget also has a new report out on this subject calling for a more aggressive (unrealistically aggressive, I would say) debt-stabilization target of 60 percent of GDP by 2018. But probably the most interesting part of their report is this table showing foreign countries’ ability to recover from major debt situations:
That said, I think the point this underscores is simply that the problem of debt reduction isn’t primarily a policy problem, it’s a political problem. As long as members of the Republican Party remain 100 percent opposed to tax increases, you can’t possibly have a bipartisan agreement on debt-reduction. And I think the big moral of 2001 is that you have to have bipartisan agreement on debt-reduction. The Clinton administration succeeded in achieving massive deficit reduction and was putting the country in a position to deal with the long-term fiscal challenge. But the Republican Party didn’t buy in to the theory that the long-term fiscal challenge should be dealt with. So instead of embracing budget surpluses as a way to massively reduce the debt-to-GDP ratio ahead of the baby boomers’ retirement, they characterized surpluses as a sign of overtaxation that required large, deficit-inducing tax cuts. And of course they got Alan Greenspan to embrace that theory.
So if I were a Democratic legislator, I would just shrug at all these reports and tell the authors to come talk to me when they’ve found some Republicans who are willing to say that the looking bankruptcy of the country is a bigger problem than high taxes. I don’t see any in the House, I don’t see any in the Senate, so until then I don’t know what there is to talk about. Right now, Democrats have a health care bill before the congress that would somewhat improve the long-term fiscal situation so the best thing they can do is pass it.