A federal budget expert at the Cato Institute warns that the new Congress faces a crucial year to control government spending. Romina Boccia highlights the risk of extending expiring tax cuts without offsetting spending increases, potentially leading to inflation, higher interest rates, and larger budget deficits. She urges Congress to link any debt ceiling increase to concrete spending cuts and to find deficit-neutral ways to extend the 2017 tax cuts.
The new Congress faces a pivotal year to rein in government spending, according to a federal budget expert with the Cato Institute.
The provisions stem from the 2017 Tax Cuts and Jobs Act, which Boccia said was a legacy achievement for Trump in his first term. Federal debt held by the public, the debt borrowed from credit markets, is $29 trillion, or near 100% of the gross domestic product, a broad measure of the U.S. economy. The Fiscal Responsibility Act of 2023, which suspended the debt limit until last week, also established binding discretionary spending caps for fiscal years 2024 and ’25.So, she said Congress should act to pass enforceable discretionary spending caps beyond this year.
Boccia is an advocate of a congressionally delegated fiscal commission with narrow authority to stabilize the debt by reforming the main drivers of spending growth, which are Medicare, Medicaid and Social Security., which will look for regulatory rollbacks, administrative reductions and cost savings primarily through executive actions.
Medicare and Social Security alone are responsible for the entire long-term unfunded obligation of the U.S. government, she said.
Spending Cuts Budget Deficit Tax Cuts Debt Ceiling Fiscal Responsibility
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