Today, the non-partisan, Congressional Budget Office (CBO) released its analysis of the President’s 2013 Budget, and it confirms that the President has a balanced plan to reduce our budget deficits and put the country on a fiscally sustainable path, which is critical to constructing an economy that is built to last.
CBO found that by 2016 deficits as a share of the economy would be below 3 percent – a key milestone of fiscal sustainability. It found that after implementing the President’s Budget, debt held by the public will decrease and then stabilize as a share of the economy, also a key indicator of improving fiscal health. Finally, relative to CBO’s alternative fiscal scenario representing what happens if current policies are continued, the President’s Budget reduces the deficit by more than $4 trillion, according to CBO’s own estimates.
What’s important here is not just where the Budget takes us, but how we get there. CBO shows that we can achieve this level of deficit reduction by pursuing a balanced plan that asks everyone to shoulder their fair share. For instance, in line with the bipartisan budget deal agreed to last August, the Budget brings discretionary spending to its lowest level on record, and to do that, includes scores of cuts, consolidations, and savings totaling more than $24 billion in 2013. The Budget details more than $360 billion in savings to Medicare, Medicaid, and other health programs that will make these programs more effective and move our health care system to one that rewards high-quality care without violating our obligation to seniors and people with disabilities. To that, the Budget also saves an additional $270 billion through other mandatory savings such as through changes in agriculture subsidies and direct payments and federal civilian worker retirement benefits.
Recognizing that all Americans have a responsibility to do their part – especially those who have done so well these past several years – the Budget also calls for individual tax reform that: cuts the deficit by $1.5 trillion, including the expiration of the high-income 2001 and 2003 tax cuts; simplifies the tax code, lowers tax rates, and protects progressivity; eliminated inefficient and unfair tax breaks for millionaires while making all tax breaks at least as good for the middle class as for the wealthy; and observes the Buffett Rule that no household making more than $1 million a year pays less than 30 percent of their income in taxes. Moreover, the Budget does not raise taxes on the 98 percent of families that make less than $250,000 a year.
As we make these cuts, we also need to recognize that to have an economy that is built to last, we must invest in those areas critical to long-term economic growth and job creation. That is why the Budget has more than $350 billion in short-term measures for job-growth, starting this year as well as critical investments in education and skills for American workers, increases in research and development, investments in advanced manufacturing and clean energy; and a bold plan – fully paid for – to create a 21st century transportation infrastructure that will create thousands of new jobs.
This balanced approach is one that the American people support, and – as the CBO confirms – will reduce our deficits and put the country on a sustainable fiscal path. It’s now up to Congress to act on these policies, and lay the foundation for an economy built to last.
Jeff Zients is Director of the Office of Management and Budget