In recent weeks, we have seen a wave of budget commissions report on ways to tackle the nation's long-term fiscal challenges. While differing in their exact mix of policy prescriptions, the recent reports from the Co-Chairs of the National Commission on Fiscal Responsibility and Reform, the Bipartisan Policy Center's Deficit Reduction Task Force, and the Pew-Peterson Commission on Budget Reform would all have you believe that debt held by the public must be stabilized at around 60 percent of GDP within roughly a decade, that most of the fiscal gap should be closed by cutting spending, and that the economy will be strong enough to absorb austerity measures within the next year or two. We disagree.
Recent budgetary proposals underplay -- if not totally ignore -- the scarring effects of the Great Recession and the crisis at hand in the U.S. labor market. They profess a need for shared sacrifice and place the brunt of deficit reduction on the middle class while prioritizing tax rate reductions for corporations and top earners in their tax reform proposals. They take it for granted that Social Security benefits must be cut even though that program has not been contributing to the structural budget deficit and has amassed a surplus of $2.5 trillion. In short, they ignore the plight of working Americans and the need to rebuild the middle class.
Our long-term fiscal challenges are very real and should be addressed in a timely fashion, but fear-mongering tactics and a slash-and-burn approach to the federal budget are grossly irresponsible. Implementing austerity measures prematurely, before unemployment has fallen considerably and economic growth has accelerated, would risk years of anemic growth, diminished tax receipts, and cyclical budget deficits. Similarly, budget proposals that merely shift costs from the federal government to states, businesses, and consumers cannot be condoned as sound economic policy. A budget is the most definitive embodiment of national priorities - what we value most in terms of social insurance, public investment, and national security - and how we fund them. Rather than using our long-term fiscal challenges as a mandate to betray our national values and butcher the social safety net, we view the present fiscal juncture as an opportunity to rebuild the American economy and shape a future of shared prosperity.
In this context, Our Fiscal Security, a collaborative effort of Demos, the Economic Policy Institute, and The Century Foundation, proposes Investing in America's Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility, a Blueprint that achieves dual needs -- creating jobs and investing in America while placing the federal budget on a sustainable path for the future. This fiscal path reaches primary budget balance by 2018 and stabilizes debt as a share of the economy without demanding draconian cuts to national investments or to vital safety net programs. In fact, we believe that job creation and long-term investments should be enhanced now because full employment and robust economic growth are essential to a healthy economy and successful deficit reduction.
The Blueprint is built around five guiding principles that we actually adhere to: job creation first, stabilize debt as a share of the economy, expand pro-growth public investments, make targeted revenue increases, and avoid cost shifting "band-aid" solutions.
Our Fiscal Security's Blueprint demonstrates that there is a viable, progressive alternative to the calls for premature austerity measures, broad cuts to entitlement programs, diminished public investment, and regressive tax increases. Our goal in improving the long-term solvency of Social Security is strengthening retirement security, not shifting costs and financial risk to individuals. Our agenda for health care reform prioritizes restructuring provision of care and reducing excess cost growth for the nation as a whole, rather than merely capping the federal government's health care liability. The primary objectives behind our proposed tax expenditure reforms are reducing the deficit and funding public investment, not reducing marginal tax rates on corporations and high-earning individuals. And, in stark contrast to the recent budget commission proposals, the Blueprint places more of the burden of deficit reduction on targeted revenue increases than cutting social programs and investment. This path modernizes an antiquated tax code and targets revenue increases to those who can best afford to pay more, raising substantial revenue while making the tax code more progressive.
Our Blueprint achieves budgetary sustainability while promoting a stronger, broader middle class. A strong middle class will not only benefit the working families within it but also the overall economy as well, and growing productivity in turn can help us work toward trimming deficits and paying down the national debt. But the middle class has been under economic assault over the last few decades; inequality has widened and meaningful economic progress has stalled.
We believe that the recession is not a justification for fiscal austerity, but rather an opportunity to show how investing in the American economy can help us grow our way out of tough fiscal times. Americans have a choice about how best to overcome our long-term fiscal challenges. Some will suggest that immediate fiscal austerity measures and widespread cuts to national investments are the only way to improve the fiscal outlook sufficiently. We believe that such a path of overzealous fiscal consolidation would be counterproductive and wreak havoc on the U.S. economy. Instead, we should actively pursue job creation and invest in the American economy while simultaneously demanding fiscal responsibility as the economy and labor market recover from the Great Recession.