Liberal group releases budget guidelines

“Policymakers really shouldn’t sign these pledges. Pledges are really damaging,” he said, adding that it is also bad for liberal politicians to sign pledges to never reduce any entitlement benefits, given the need to do so. He took issue with a statement by Senate Majority Leader Harry Reid (D-Nev.) last week that Social Security can be dealt with in 20 years. Even though it is not driving the debt now, the retirement program should be made solvent sooner rather than waiting, Greenstein said.

On taxes, he said the center is hopeful Gang of Six talks in the Senate will succeed in putting the recommendations of the president’s fiscal commission into law. Doing so would mean Republican members Sens. Tom Coburn (Okla.) and Mike Crapo (Idaho) can successfully argue eliminating tax earmarks while lowering rates does not violate the pledge, he noted.

He said there is simply no way to address the deficit without raising taxes because doing so would require decimating entitlement programs right away.

On that note, he said he will do everything he can to oppose House Budget Committee Chairman Paul Ryan (R-Wis.) if he proposes next month to block granting Medicaid while extending Bush-era tax cuts for the wealthy as part of the House 2012 budget resolution.

Greenstein said the argument that there are huge inefficiencies in Medicaid are wrong and the block granting proposal — under which the federal share of Medicaid would switch from a fixed share to a fixed dollar amount — would “probably mean throwing millions of into the ranks of the uninsured.”

Greenstein said Ryan’s Roadmap plan to tackle the deficit through cuts alone has set back the cause of deficit reduction because it has hardened the GOP view that you can balance the budget without any new revenue.

On the other hand, he sided with the Congressional Budget Office in concluding the President Obama’s 2012 budget does not appear to meet Obama’s goal of stabilizing debt as a percentage of the economy within the next decade.

The Obama effort “almost certainly does not contain not enough to get there” he said in a press conference.

The six CBPP principles are:

1. Craft a reduction plan that is balanced and inclusive, with a 50-50 split of spending reductions and revenue increases.
2. Enact discretionary spending caps, but only in the context of package. Giving in to Republican demands for caps first would mean no overall package gets agreed later, Greenstein argued, because the GOP incentive to bargain is removed. 
3. Recognize the largest spending contribution will come from slowing healthcare costs, but this savings cannot be achieved in the first 10 years. Both parties have agreed not to hit those older than 55 with Social Security or Medicare cuts, so this is not a source of savings now and expectations of balancing the budget must be tempered by that fact.
4. Let all the Bush tax cuts expire, even for the middle class. The center realizes this is unpopular even with Democrats, but the move alone would nearly stabilize the debt and is therefore necessary.
5. Avoid overall spending caps or a balanced budget amendment. These policies will make recessions worse by limiting unemployment and other mandatory “automatic stabilizer” payments. They are also a “cop-out,” the center argues, because they do not contain actual cuts or tax increases.
6. Avoid making the problem of poverty and inequality in the U.S. worse. The center argues that the Bowles-Simpson fiscal commission recognized this and the deficit deals of 1990, 1993 and 1997 all reduced inequality while reducing the deficit.