NEW YORK, September 30, 2021 / PRNewswire / – As Congress remains embroiled in negotiations for a $ 3.5 trillion budget reconciliation bill that could fund a wide range of long-standing Democratic legislative priorities and transform the role of government in the economy, the Conference Board’s Economic Development Committee (CED) has released a new Solutions Brief report, The Reconciliation Bill: Finding an Affordable Way to Build Back Better. Bottom line: Soaring costs could undermine economic stimulus efforts and prove catastrophic if left unchecked.
As detailed in the report – the latest in a series of Solutions Briefs on Sustaining Capitalism – the reconciliation bill is said to be one of the costliest pieces of legislation enacted in U.S. history. However, the reconciliation process was originally intended to facilitate the passage of painful deficit reduction legislation, not to truncate the legislative process and move the review behind closed doors. In addition to the high price, there are “smoke and mirror” tactics that would entail costs well beyond the $ 3.5 trillion mark, further destabilizing the country’s precarious fiscal trajectory amid continued supply chain bottlenecks, inflation fears and the highly transferable Delta variant.
“The country’s fiscal outlook was volatile before the pandemic and is significantly worse in the aftermath of COVID-19. Faced with proliferating public debt and massive increases in spending, including $ 5.3 trillion in pandemic relief – the US economy is heading into serious financial trouble, ”said Dr. Lori Esposito Murray, president of DEC. “A top priority must be to alleviate a future fiscal crisis spurred by a lack of foresight and a reluctance to face growing debt.”
Indeed, over the next decade, US public debt is on an unsustainable path to surpass its all-time high: 106.3% of GDP at the end of World War II. According to the latest projections from the Congressional Budget Office, annual increases in the benchmark budget deficits over the next 10 years would increase the accumulated public debt from 79.2% of GDP at the end of fiscal 2019 to 106.4% at at the end of the exercise. 2031. This does not include the projected deficits of the bipartite infrastructure plan which has not yet been adopted, which the CBO estimates will add $ 256 billion budget deficits over the 2021-2031 fiscal years. How these plans will be funded remains unknown.
In its new summary of solutions, CED proposes seven steps to resolve the country’s structural economic problems and its budgetary vulnerabilities. They understand:
Put the problem of budget deficit and debt into the calculations: The essence of the reconciliation exercise should be a future sustainable debt trajectory. Debt matters. The reconciliation bill is expected to include the net savings needed to cap and ultimately reverse the growth in the debt-to-GDP ratio.
Set priorities: Once the nation puts the cost of a sustainable budget on the table, not all the wishes of the current reconciliation debate will square. These initiatives need to be reviewed and prioritized in a transparent manner.
Tax reform, don’t just raise rates: Simply raising tax rates increases the burden where it already is greatest – on those who already pay taxes. Tax reform removes preferential tax breaks because the best tax break for everyone is no tax break for anyone. Tax neutrality also enables the most efficient distribution of capital and labor, and therefore the strongest and most sustainable economic growth.
Prohibit the use of reconciliation to increase the deficit: Reconciliation was created to help Congress take painful measures to reduce the deficit. Self-indulgence does not need a parliamentary head start. The finance law should be amended to specify that reconciliation can only be invoked for deficit reduction.
Consider another National Commission on Tax Accountability and Reform: Under the right circumstances, a committee can focus attention and provide neutral expertise. If today’s elected policymakers cannot address this crucial issue, they should cry out for help.
The new summary of solutions, The Reconciliation Bill: Finding an Affordable Way to Build Back Better, can be accessed here.
The Conference Board’s Economic Development Committee (CED) is the non-profit, non-partisan, business-led public policy center that provides well-researched analysis and reasoned solutions in the best interests of the nation. CED Trustees are CEOs and key executives of large American companies who bring their unique experience to address pressing political issues of today. Together, they represent over 30 industries, over $ 1 trillion in revenue, and over 4 million employees. www.ced.org
About the Conference Board
The Conference Board is the member-driven think tank that provides reliable information about the future. Founded in 1916, we are a non-partisan, not-for-profit entity with 501 (c) (3) tax exempt status in the United States. www.conference-board.org
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SOURCE Conference Board (CED) Economic Development Committee