Paul Weinstein Jr., former adviser to Clinton and Gore, fellow at the Progressive Policy Institute: Next, cut spending

Next, cut spending. By Paul Weinstein, Jr
Or debt will doom our future
NY Post, February 10, 2009

DESPITE the need to stimulate the economy now, the long-term health of the nation depends on a return to the fundamentals - namely, getting our fiscal house in order. So the Obama administration should lay out a plan now that would restrain spending, curb entitlement growth, eliminate tax breaks for special interests and make government more efficient.

Any effort to cut the deficit must wait until the current crisis abates and the economy gets back on its feet, but there is no reason not to enact legislation now that would put into place triggers that will kick-start a series of budget reforms later, when the time is right.

In fact, acting now would do much to allay the concerns of our economic partners, who are fearful that US borrowing will crowd them out of the credit markets. It would also help to keep down the cost of credit and capital for the private sector - and ensure the eventual recovery doesn't stall down the road.

What would such a reform plan look like?

First, it would restore pay-as-you-go budgeting and caps on discretionary spending that we had in the 1990s. These laws helped hold down the rate of spending and were a key reason that the nation experienced surpluses by the end of the decade.

Second, it would create a bipartisan commission (like the one that long handled military-base closings) that would be charged with identifying which expenditures, tax subsidies and government inefficiencies can be curbed, eliminated or streamlined. Congress would then have an up-or-down vote on the commission's recommendations, without amendment.

Third, it would give the president the authority to send pork projects and special-interest tax breaks back to Congress for reconsideration, creating a constitutional alternative to the line-item veto.

Finally, it would, as suggested by the bipartisan "Fiscal Seminar" group, put into place targets for entitlement spending and tax expenditures that would be budgeted for the long run - say, 30 years. When unexpected events pushed spending or tax expenditures above targets, automatic triggers would be used to slow spending growth, increase revenues or some combination of the two.
Such a system would force policymakers to address the greatest threat to our nation's long-term fiscal well-being: burgeoning retirement and health-care costs.

If we don't, and insist on maintaining the tax burden where it has been over the last 50 years (about 18 percent of GDP), the Fiscal Seminar group estimates public debt will most likely exceed 100 percent of GDP within 25 years.

At the end of World War II, America's debt exceeded its entire gross domestic product. Yet rather than throwing up their hands, our parents and grandparents whittled down their deficits. By the Kennedy administration, the ratio of debt to GDP was back down to prewar levels.
What lesson can we learn from the "greatest generation"? Simply this: Opportunity, not debt, is the legacy we owe to future Americans. We cannot afford to let budget basics get lost in our efforts to right the economy.

Paul Weinstein Jr., a former policy adviser to Bill Clinton and Al Gore, is a fellow at the Progressive Policy Institute and Johns Hopkins University.