A federal budget expert urges the new Congress to address government spending and warns of potential consequences if they fail to act.
The new Congress faces a crucial year to control government spending, according to a federal budget expert from the Cato Institute. Romina Boccia, director of budget and entitlement policy, warned that missteps by President-elect Donald Trump or the new Congress could trigger further inflation, high interest rates, and escalating federal budget deficits.
Boccia highlighted massive tax cuts expiring at year's end, emphasizing that extending them without making corresponding cuts would significantly worsen the federal deficit. She linked these provisions to the 2017 Tax Cuts and Jobs Act, a key achievement for Trump's first term. Boccia urged Congress to tie any debt ceiling increase to concrete spending reduction commitments and ensure any tax cut extensions are deficit-neutral. Federal debt held by the public stands at \$29 trillion, nearing 100% of GDP. The Congressional Budget Office projects it to hit an unprecedented high of over 106% of GDP by 2027, a figure that could be reached much sooner if tax cuts are extended without offsets. Boccia stressed the detrimental impact of rising debt on private investment, as government borrowing crowds out the capital available for the private sector, ultimately driving up interest rates. The Fiscal Responsibility Act of 2023, which temporarily suspended the debt limit, also established discretionary spending caps for fiscal years 2024 and 2025. Boccia emphasized the need for Congress to enact enforceable spending caps beyond this year, considering the likelihood of increased spending in defense, border security, and immigration enforcement. She believes that spending caps can help limit this damage and provide a framework for negotiations and prioritization. Boccia also advocates for closing loopholes that allow lawmakers to circumvent spending limits. She proposes a bipartisan congressionally delegated fiscal commission with the authority to stabilize the debt by reforming key spending drivers like Medicare, Medicaid, and Social Security. She argues that such a commission could facilitate meaningful spending cuts by shielding elected officials from the political fallout. Boccia believes healthcare should be a top priority, emphasizing the rapid growth of Medicare and Medicaid compared to the leveling-off trend projected for Social Security. She warns that failing to make tough budget decisions now could result in a forced and painful fiscal crisis down the line
Economics BUDGET CONGRESS SPENDING DEBT FISCAL RESPONSIBILITY
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