Policy leaders and experts across the political spectrum have put forward a number of comprehensive plans that can reduce America’s long-term debt and lay a strong foundation for future economic growth. By examining these plans, policymakers and the public can gain a better understanding both of what’s required, as well as what we have to gain, in putting our fiscal house in order.
Comprehensive plans generally phase in changes slowly in order to give people time to plan, and to protect near-term economic growth. And while some would rely more on spending reductions and others would lean more on tax increases, a key feature of most of these plans is that they include a combination of both.
The Simpson-Bowles plan was the product of the National Commission on Fiscal Responsibility and Reform, co-chaired by a bipartisan team of two distinguished public servants: former Senator Alan Simpson (R-WY) and Erskine Bowles, former chief of staff to President Bill Clinton.
Simpson-Bowles catalyzed the discussion about America’s long-term debt and deficits by raising awareness of the stark projections of future debt and putting forward a series of proposals designed to put the nation on a sustainable fiscal path. The National Commission was created in 2010 by President Obama, with input from Congress, and included members of Congress from both parties as well as business and labor leaders. Although 11 of the Commission’s 18 members endorsed the co-chairs recommendations, the proposal fell short of the 14 votes required for it to be presented for a vote by the Congress. However, it does offer insight into the give-and-take decisions that will have to be made as policymakers grapple with long-term debt.
Some key highlights from the plan include:
Simpson and Bowles updated their proposal in 2013 to account for new budget projections and policy developments, but the principles at the core of the plan remained unchanged – shared sacrifice, changes to both taxes and spending, tackling the big challenge of entitlement spending, and putting debt on a downward path as a share of the economy.
In 2010, the Bipartisan Policy Center established the Debt Reduction Task Force, chaired by former Senate Budget Committee Chairman Pete Domenici (R-NM) and Alice Rivlin, a former Clinton Administration budget director and the founding director of the Congressional Budget Office. The 19 members of the Domenici-Rivlin Task Force included former officeholders at the federal, state, and local levels; budget experts; and representatives of labor, seniors, and small business advocacy groups.
This diverse group, representing interests across the political spectrum, concluded that “without action, growing deficits and debt will create serious problems for our economy, our prosperity, and our leadership in the world.”
Specifically, the Task Force put forth a comprehensive plan of tax and spending reforms that would:
The Domenici-Rivlin plan was updated in 2012, combining new measures to deal with the fiscal cliff with the fundamental principles that underpinned the original framework. The updated plan noted that “the challenge can be met if lawmakers demonstrate leadership and put everything on the table. The changes we suggest are not easy, but they improve the quality and efficiency of government and strengthen the economy for all Americans.”
In 2011, the Peterson Foundation launched the Solutions Initiative, bringing together policy organizations from across the ideological spectrum to develop plans to achieve long-term fiscal sustainability. A year later, Solutions Initiative II addressed the near-term fiscal challenges of the "fiscal cliff" while offering updated long-term plans.
Today, America’s economic recovery is finally taking hold and current deficits are down from the record highs during the recession. But at the same time, far too many American families are being left out of the recovery, and our nation still faces an unsustainable long-term fiscal outlook, which threatens economic growth.
Against this backdrop, in 2015 the Foundation released Solutions Initiative III.
Experts from five leading think tanks — the American Action Forum, the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, and the Economic Policy Institute — developed specific, "scoreable" policy proposals to set the federal budget on a sustainable, long-term path for prosperity and economic growth. The groups then recommended their top policy priorities for congressional policymakers and the incoming presidential administration.
The plans presented under Solutions Initiative III make clear that there are many options available to build a brighter future. While each plan reflects different policy priorities, taken together, the plans demonstrate clearly that comprehensive solutions do exist. They provide a blueprint for lawmakers to chart a better course for America, with less debt, faster economic growth, broader prosperity, and enhanced economic opportunity and mobility.