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Top 10 Fiscal New Year's Resolutions

By Kristi Keck, CNN
Fiscal year 2011 is here, but Congress has yet to pass President Obama's budget.
Fiscal year 2011 is here, but Congress has yet to pass President Obama's budget.
  • Fiscal year 2011 starts Friday
  • Economists want to see Congress make a decision on the expiring Bush tax cuts
  • Congress has a reputation for missing deadlines. Could this be the year that changes?
  • Economists on both sides of the aisle want to see more work on health care

(CNN) -- Happy New Year! Fiscal year 2011 is here. This momentous day comes just one month before voters head to the polls for the midterm elections, but for many of them, the time is not ripe for an economic celebration.

So instead of popping the bubbly, CNN chose to mark the occasion by handing lawmakers a ready-made list of fiscal New Year's resolutions, brought to them by economic experts hoping for a brighter 2011.

Finish old business

Both parties agree something needs to be done about the Bush tax cuts, which are set to expire at the end of the year. The problem is, Democrats and Republicans don't see eye-to-eye on the solution.

Lawmakers need to decide whether to extend the tax cuts for all income brackets, as most Republicans and some Democrats propose; extend them for all but the wealthiest of Americans, as President Obama and the Democratic leaders prefer; or do nothing and let them expire.

A majority of a panel of leading economists surveyed by said that the tax cuts should be renewed for everyone.

Economists: Extend Bush tax cuts for everyone

"The trouble with it is is, if they just say postpone the decision for two years, then two years from now they'll have the same battle all over again -- in an election year for president," said economist Barry Bosworth, a senior fellow at the Brookings Institution and a former adviser to President Carter.

Bosworth supports a temporary extension for all income brackets, coupled with a resolution the kill the tax breaks after two years.

"If we are going to do something about the budget deficit, we are all going to have to participate in it, not just a few rich people," he said.

Take on new challenges

Donald Marron, director of the Urban-Brookings Tax Policy Center, has an ambitious request for Congress: Reform the tax system.

The issue with taxes goes beyond the expiring Bush cuts, says Marron, who served on the President's Council of Economic Advisers and was acting director of the Congressional Budget Office.

"The real debate we need to have is about how much tax revenue we need to raise as a country, and then designing a tax system to do that," he said.

"It would be nice to see a bipartisan effort at sincere tax reform. Our current tax system has many flaws and certainly is more harmful for the economy than it ought to be."

Be punctual

Congress has a bad reputation for missing deadlines, and there's no better time than now to fix that.

Even though fiscal year 2011 has begun, Congress still doesn't have a budget in place, and one might not materialize for a while. But a tardy budget is nothing new. In fact, they've been par for the course for most of the past 35 years.

"It's pretty inexcusable even though we excuse it every year. There's no reason on earth why [lawmakers] shouldn't be able to make up their minds before the start of the fiscal year," said Rudolph Penner, a former Congressional Budget Office director who is now public policy scholar at at the Urban Institute.

New year, no federal budget

Without a formal budget, Congress usually passes "continuing resolutions" for a month or two at a time.

"It would be good if Congress could work itself back to a situation where it made its decision on some of the timelines that were originally intended," Marron said.

Plan ahead

Christian Weller, a senior fellow at the progressive think tank the Center for American Progress and a professor of public policy at the University of Massachusetts, says while lawmakers focus on the present economic conditions, they also need to weigh the long-term effects.

"The lawmakers have to strike a clearer balance being reviving, strengthening, accelerating the private sector recovery in the next 12- months and at the same time laying out a plan for long-term fiscal sanity," he said, noting that quick fixes aren't the answer to economic recovery.

Become better communicators

Weller says it's time for Congress to "bring some sanity back" to its economic debates.

"This is not a bumper sticker conversation. This is not a discussion that can be solved at Tea Party or union rallies. This is a discussion that will require hard work and tough choices," he said. "What I want to see from Congress is a willingness to make tough choices."

This is not a bumper sticker conversation. ... This is a discussion that will require hard work and tough choices.
--Christian Weller, Center for American Progress

Weller said lawmakers are stuck in a situation where "politics reigns over good policy.

"We can't get the parties together because politics supersedes policy for one party on a $30 billion bill, how are you going to do it on a $3 trillion budget," he asked.

Get the (fiscal) house in order

J.D. Foster, a senior fellow at the conservative think tank the Heritage Foundation, says Congress needs to restore confidence in the American people, and the only way to do that is by getting the fiscal house in order.

"Reassuring families and businesses and the credit markets that Washington intends to get spending down and the fiscal house in order would be an important next step to helping that confidence that today is so sorely lacking," he said.

"It's absolutely necessary for the economy to begin to go past muddling along -- which is where we are now -- to a robust recovery. What's missing is one thing and one thing alone: Confidence."

Be healthy

Economists on both sides of the aisle agree that health care reform is not a done deal yet.

"The problem with the health care -- there's always been two problems in the United States. One is coverage. Lots of people don't have health insurance," Bosworth said. "The bigger problem to me was health care cost too much."

Bosworth says the law passed this year deals with the coverage problem, while not adequately addressing health care costs.

Foster says he wants to see the whole thing repealed.

"There are probably some things in the overall legislation that could be kept, but it is such a morass -- you don't have the option of going through and trimming away the bad parts and keeping the good parts. You really just need to repeal the whole thing and start health care reform with some sound principles," he said.

Help others

... Such as your unemployed constituents, and focus on jobs.

"Top priority still should be job creation. The biggest problem is when people are out of work," Bosworth said.

But what to do about it? "That I think is a lot of the problem," he said.

"Monetary policy can't do much anymore. If we want to try to stimulate the economy, the only way left to do it is some sort of fiscal stimulus, and that has zero political support."

Play by the rules

Foster says there is a real "bipartisan rage" bubbling in Congress against China's trade policy.

"China's policy is indefensible, but we have to be very careful how we respond," he said.

The House on Wednesday passed legislation which authorizes the Commerce Department to impose duties on imports from countries with undervalued currencies. The Senate, however, is not expected to take up the issue until later this year.

China has pushed back against pressure on its currency policies and trade balance, calling criticism "baseless."

Congress spoiling for a China fight

Foster says in his opinion, Treasury Secretary Timothy Geithner needs to tread carefully and not throw flames on the fire in Congress as tensions rise.

"The simple solution is -- and it is a simple one -- go back to the old rule book. The treasury secretary's job is to keep the Congress from starting trade wars," Foster said.

Get out of debt

OK, so one can dream.

CNNMoney's Jeanne Sahadi and Charles Riley contributed to this report.