The deficit is going down. Woo-hoo! Let the celebrations begin.
Oh, wait. That may not be altogether a good thing. Certainly not for Republicans. They need an out-of-control deficit to bludgeon Democrats into cutting more spending. It may not be good news for the economic recovery either. Budget austerity means slower growth. Want proof? Look at Europe.
The Congressional Budget Office estimates that this year’s federal budget deficit will drop from $1.1 trillion to $845 billion. Economists at Goldman Sachs project that we will get the deficit under control within two years. Why is this happening?
Economists predict that over the next few decades, U.S. economic growth will be a full one-point less than the growth we enjoyed between World War II and the Great Recession. Third Way’s new report, The Bargain, is the first report to quantify what this would mean for the economy and middle class Americans. Between 2018 and 2032, losing one point would mean 5 million fewer jobs, $2.5 trillion less in personal income, and $5 trillion less in government revenue.
It doesn’t have to be this way.
In The Bargain, we provide a roadmap for seven bipartisan deals, showing where each party needs to give ground and change their thinking. These deals would modernize our economy for a new era of fierce global economic competition. Without them, we are destined for slower growth.
David Brooks of The New York Timescalls the report “a perfect model of how you might structure a series of big trades to move the country back on the growth path—on innovation policy, tax policy, spending policy and so on.”
David Kendall, Third Way’s Senior Fellow for Health and Fiscal Policy, made an appearance on HuffPost Live today to discuss our proposal to require the IRS to send you a taxpayer receipt — a breakdown of exactly how much tax you paid, for exactly what. But Congress is stalling it. What’s to fear?
The Third Way study makes the dilemma clear: In 1962, we spent 2 1/2 times more on investments than on entitlements; today, we spend three times more on Social Security and Medicare than we do on infrastructure, education, medical research and the like. This study and its facts are an MRI of a nation hitting the skids, and you don’t need a degree to read the results. If we don’t reverse these trends, it is very simple. The American dream is dead.
The Ryan budget has put sequestration back in the news - what would sequestration mean for you?
Third Way has calculated 10 ways that sequestration would impact the everyday lives of Americans, particularly those who see very little value in government. Our examination of sequestration includes bad and worse news: criminals evading incarceration, new cases of food poisoning, more time on the tarmac, unreliable weather reports, and gun purchase delays.
Entitlements are a critical part of economic security, but without change, investments will all but dry up — threatening our economy’s ability to grow and create opportunity in the 21st century.
Third Way’s Jon Cowan in POLITICO on the Best policy innovations of 2011:
A taxpayer receipt: The single-largest cost in almost every family’s budget is the money they send to Uncle Sam; in 2011, conversations began on the Hill and around town about showing taxpayers where their money goes.
