It is now widely understood that the federal government faces a large long-term mismatch between its policy commitments and its projected revenues. Closing this fiscal gap will, by all authoritative accounts, require hard choices to yield trillions of dollars in budget savings. Achieving these while sustaining the nation’s highest public priorities, supporting robust and sustained economic growth, and dealing with inevitable emergencies and surprises will be difficult at best.
Soon after the fall elections the U.S. will approach a “fiscal cliff” which provides still another opportunity for negotiated agreements on large policy adjustments to address the long-term problem. Continued stalemate would trigger sudden across-the-board spending cuts and massive tax increases, pitching the nation back into recession and greatly complicating an already staggering political and fiscal challenge. Whatever budget savings are negotiated, whether on this or the far side of the fiscal cliff, must be implemented and sustained year by year through the federal government’s budget process.
At this inopportune time, the federal government’s budget process has virtually seized up. Routine decisions on annual discretionary spending are usually late, causing uncertainty and disruption. The largest parts of the budget, including revenue policy and entitlements, are on autopilot. Major decisions to reform the tax code and adjust spending priorities are blocked or deferred. Even if the familiar budget process were working smoothly, however, it would not be up to the tasks now facing us. We need a new approach that is more far-sighted and strategic, more focused and disciplined.
To help the next Administration and the next Congress be better equipped to meet the fiscal challenge, a group of four expert observers of that process has prepared the attached set of memos. Each memo presents a set of recommended actions – both practical and bold – that deserve serious consideration in a necessary effort to repair and remake the federal budget process. Two of the memos describe steps to expand the budget’s time horizon and to help policy makers act more strategically to meet the public’s highest priorities while finding budget savings sufficient to put the federal budget on a sustainable path. The other two memos are directed, respectively, at the executive branch and Congress, and propose complementary changes to help streamline, focus, and discipline budget decisions and to better fix responsibility for budget outcomes.
These memos were jointly authored by: Phil Joyce, Roy Meyers, Paul Posner, and Steve Redburn.