A dozen budget wishes for Congress

Article Highlights

  • Increasing discretionary spending this year by decreasing entitlement spending in the future is a good deal, as is using chained CPI.

    Tweet This

  • It is possible, though not probable, that chained CPI’s (Chained Consumer Price Index for All Urban Consumers) day has come.

    Tweet This

This week saw the start of budget negotiations between the House of Representatives and Senate. But as Republicans and Democrats sit down together less than a month after a government shutdown, will the two sides be able to find common ground? Global Public Square asked 12 commentators, analysts and policy makers for their take on what Congress should be discussing – and what an agreement should include. All views expressed are the writers’ own.

Major tax reform – Michael R. Strain, American Enterprise Institute

My wish list for the current round of budget negotiations is pretty easy to spell out: Structural reforms of Medicare, Social Security, and Obamacare to significantly slow their spending growth in the decades to come; major tax reform for households, including family-friendly reforms and severe curtailment of popular tax breaks like the exclusion for employer-provided healthcare and the mortgage interest deduction; corporate tax reform which significantly lowers the corporate rate (down to zero, ideally); and an increase in discretionary spending on socially valuable infrastructure, basic research, and other public goods.

Of course, if you think that will happen, then, to borrow from the metaphor, I’d like to sell you a major health insurance reform policy with the promise that if you like your current plan then you’ll get to keep it.

Since we won’t come close to a grand bargain, let alone to solving all our long-term budget problems, I’ll be happy if the current round of budget negotiations moves us in the right direction.

It is possible, though not probable, that chained CPI’s (Chained Consumer Price Index for All Urban Consumers) day has come. As a more accurate and lower measure of inflation, chained CPI would both slow the growth of Social Security spending by trimming cost-of-living adjustments and slow inflation adjustments to tax brackets, raising tax revenue without explicitly increasing taxes. It is also possible, and probable, that the GOP will be able to trade relief from this year’s sequester cuts to discretionary spending for entitlement spending cuts in future years. Conservatives should support such a trade, provided of course that there is an enforcement mechanism for the future cuts other than “we promise.”

Increasing discretionary spending this year by decreasing entitlement spending in the future is a good deal, as is using chained CPI. Conservatives and liberals alike should declare this “humble bargain,” if enacted, a success.

Michael R. Strain is a resident scholar at the American Enterprise Institute

See the full article here.

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Michael R.
Strain

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 20
    MON
  • 21
    TUE
  • 22
    WED
  • 23
    THU
  • 24
    FRI
Monday, October 20, 2014 | 2:00 p.m. – 3:30 p.m.
Warfare beneath the waves: The undersea domain in Asia

We welcome you to join us for a panel discussion of the undersea military competition occurring in Asia and what it means for the United States and its allies.

Tuesday, October 21, 2014 | 8:30 a.m. – 10:00 a.m.
AEI Election Watch 2014: What will happen and why it matters

AEI’s Election Watch is back! Please join us for two sessions of the longest-running election program in Washington, DC. 

Wednesday, October 22, 2014 | 1:00 p.m. – 2:30 p.m.
What now for the Common Core?

We welcome you to join us at AEI for a discussion of what’s next for the Common Core.

Event Registration is Closed
Thursday, October 23, 2014 | 10:00 a.m. – 11:00 a.m.
Brazil’s presidential election: Real challenges, real choices

Please join AEI for a discussion examining each candidate’s platform and prospects for victory and the impact that a possible shift toward free-market policies in Brazil might have on South America as a whole.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.