Budget Eperts: Save Now Or Weep Later

Experts are asking Congress to do a better job of coming up with the revenue to cover the cost of future liabilities.[@@]

One group of budget watchers called for a general effort to return to the “pay as you go” philosophy, to keep programs from causing huge federal budget deficits in coming decades, while Congressional Budget Office Director Douglas Holtz-Eakin promoted efforts to put Social Security, Medicare and Medicaid on solid footing by boosting the national savings rate.

The budget cutters released a joint statement Thursday that criticizes efforts to enact a permanent repeal of the federal estate tax, create new retirement savings tax incentives and eliminate the alternative minimum tax without providing new sources of revenue to replace the lost tax revenue.

Proposals that would increase the budget deficit and the government’s debt “might not be too alarming if we could be sure that they were short term and that we would be returning to a balanced budget in a few years,” says Robert Bixby, executive director of the Concord Coalition, Washington, one of the groups that put out the joint statement. “Unfortunately that is not the case.”

Many of lawmakers’ proposals carry a low cost in their first few years but could have an enormous cost in the years beyond the 10-year timeframe the government normally considers when making budget projections, Bixby warned.

“It could be very damaging to markets both at home and abroad that the president and the Congress have no interest in fiscal discipline,” Bixby said.

If lawmakers eliminate the AMT and the estate tax, they could add more than $1 trillion to the federal debt over the next 10 years and far more in coming decades, according to the groups that issued the joint statement.

Coalition members say they believe many members of Congress would support a return to the old pay-as-you-go concept.