Peter G. Peterson Foundation Analysis of "Fiscal Cliff" Deal Shows U.S. Still Has a Severe Long-Term Debt Problem
FOR IMMEDIATE RELEASE
January 29, 2013
The American Taxpayer Relief Act of 2012 Delays by Just One Year the Nation's Unsustainable Debt Outlook
NEW YORK — Recent budget reforms have not significantly improved the nation’s long-term fiscal outlook, according to a report released today by the Peter G. Peterson Foundation. The report analyzes how the American Taxpayer Relief Act of 2012 (ATRA), the agreement passed on New Year’s Day to avert the fiscal cliff, impacts the outlook for U.S. federal debt. The report concludes that passage of ATRA and the Budget Control Act of 2011 (BCA) merely delays the U.S. reaching debt-to-GDP levels that would damage the economy and risk a fiscal crisis.
Key Findings in the Analysis Include:
"The American Taxpayer Relief Act may have prevented the immediate threats that the fiscal cliff posed to our fragile economic recovery, but we haven’t remotely fixed the nation’s debt problem," said Michael A. Peterson, President and COO of the Peterson Foundation. "The primary goal of any sustainable fiscal policy is to stabilize the debt as a share of the economy and put it on a downward path, and yet our nation is still heading toward debt levels of 200 percent of GDP and beyond. Americans shouldn’t be under any false impression that our debt problems are behind us. And because it takes years to implement policies fairly and gradually, we need to make decisions now, before we are forced by markets to take severe action that hurts our economy and our citizens."
The Foundation's analysis finds that recent deficit-reduction measures had little effect on the nation’s long-term debt outlook because they fail to address the key drivers of the growing debt, including the most significant component: rapidly rising health care costs. Spending on health care entitlements, Social Security, and interest costs are still projected to rise faster than revenues, leading to widening deficits and growth in federal debt. Until spending in those areas is reduced, tax revenues are increased, or policymakers implement a combination of both, the United States will continue to have a severe long-term debt problem.
Read the full report here.
About the Peter G. Peterson Foundation The Peter G. Peterson Foundation is a non-profit, non-partisan organization established by Pete Peterson — businessman, philanthropist, and former U.S. Secretary of Commerce. The Foundation is dedicated to increasing public awareness of the nature and urgency of key long-term fiscal challenges threatening America's future and to accelerating action on them. To address these challenges successfully, we work to bring Americans together to find and implement sensible, long-term solutions that transcend age, party lines and ideological divides in order to achieve real results. To learn more, please visit www.PGPF.org.
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