Maya MacGuineas is president of the Committee for a Responsible Federal Budget, a bipartisan nonprofit organization. The views expressed in this piece are her own. View more opinion on CNN.
(CNN)This is a particularly important year for budgeting given three things: the need to lift the debt ceiling, the nation's dangerous fiscal trajectory and persistent inflation. Fiscal savings will be integral in addressing all three of these challenges — both in the short run to ease inflation and facilitate a debt ceiling deal, and in the longer run to combat an out-of-control debt trajectory.
The good news is that President Joe Biden's budget — the official kickoff to the budgeting process — includes about $3 trillion in deficit reduction. But his budget is a day late and a dollar short — or more precisely, it's a month late and at least a few trillion short.
To be fair, the President inherited a terrible fiscal situation. Past administrations have borrowed to pay for emergencies (as they should have), but they also borrowed to pay for tax cuts and spending increases when the economy was growing and there was no justification whatsoever for the borrowing. While he was in office, President Donald Trump approved policies that added roughly $7.5 trillion to the deficit.
However, President Biden's record, too, has been abysmal since entering office. The $1.9 trillion American Rescue Plan was too big and poorly targeted and helped spark the inflationary mess we are in now. It was followed by well over $3 trillion of further borrowing from bipartisan legislation and unilateral executive actions, according to a Committee for a Responsible Federal Budget analysis, with the $240 billion deficit-reducing Inflation Reduction Act being the only fiscally responsible piece of legislation he has signed.
Meanwhile, neither President Biden nor those before him have done much of anything to address or fund the rising costs of our nation's major health and retirement programs.
And in the end, the buck stops at the top. Just because the fiscal and economic outlook isn't all the President's fault doesn't mean it isn't his responsibility.
So the aspiration to focus on deficit reduction is very welcome news. The President's budget aims to lower deficits by $3 trillion over the next decade. And $400 billion of the deficit reduction would take place over the next two and a half years, when it can do the most good to help the Federal Reserve fight inflation and hopefully stabilize the economy without a deep recession.
The budget proposes its savings through a massive amount of new taxes and some modest cost reductions. About half the money generated would go to deficit reduction and the other half would pay for also massive (but smaller) new spending and tax breaks.
But is $3 trillion in deficit reduction enough to fix the debt dangers we face? Not even close.
The budget would still borrow $17 trillion over the 10-year budget window — an amount that is squarely in the extreme danger zone. It would allow spending to grow to nearly $7 trillion next year, spending more than we did in 2020 and 2021 when we were distributing trillions of dollars in pandemic relief.
Under the President's budget, debt as a share of the economy would be the highest we have ever seen in this country — exceeding World War II levels — in just four years. And we would pay more than $10 trillion in interest payments over the next decade, which will be more than we spend on either defense or Medicaid.
Nonetheless, the emphasis on deficit reduction breaks with those in the President's party who pretend borrowing has no risks, and recognizes the reality that if we stay on the current path, our economy, our ability to respond to future crises, our national security and our role in the world will all suffer.
Also, importantly, $3 trillion is an achievable near-term fiscal goal. While we can and should save more, an insufficient goal we can achieve is preferable to a virtuous sounding goal that we never will.
The goal of balancing the budget, or eliminating the budget deficit, by 2033, for instance, would require $16 trillion of savings over the next decade. As great as it would be to put an end to ongoing borrowing, we are too far out of balance to make such large shifts so quickly. Balancing the budget would require the equivalent of cutting all spending by one-quarter, or cutting spending outside of Social Security, Medicare, defense and veterans by 80%. That's just not going to happen — and we shouldn't waste time pretending that it is.
Instead, $3 trillion could be seen as a floor on savings for a budget deal this year — recognizing that specifics of the savings would have to change, and there would have to be additional savings packages in the next years as well.
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For instance, that level of savings could be achieved through a combination of discretionary spending caps, bipartisan health care reforms, common-sense mandatory spending cuts and a temporary deficit reduction surtax. A budget deal could also appoint a fiscal commission to deal with the longer-term challenges and remaining imbalances.
Of course, there are many ways to get to $3 trillion. And the next step is for the House and Senate to put forward their own budgets. Failing to do so, as happened last year, would be nothing short of negligent. But even before then, negotiations should begin in earnest about a savings package that we can actually get done. Both parties share blame for getting us into this situation. It is going to take both parties to work together to address the mounting debt before it becomes insurmountable.