Restoring Spending Discipline
The Path to Prosperity’s major proposals to balance the budget and pay off the debt.
Cut spending by $5.3 trillion over the next ten years relative to the President’s budget.
Reduce deficits by $3.3 trillion compared to the President’s budget over the next decade.
Cut government spending from its current elevated level of 24 percent of the economy to below 20 percent by 2015.
Put the budget on the path to balance and pay off the debt.
Q: Why doesn’t this budget balance sooner?
A: The Path to Prosperity balances the budget and pays off the debt in the long run according to the non-partisan Congressional Budget Office (CBO). Alternative growth scenarios indicate the reforms advanced by this budget could achieve balance much sooner than CBO’s static estimates. While our nation’s deficit crisis was not created overnight, Democrats in Washington have slammed on the spending accelerator and made our deficit problem drastically worse.
This budget puts an end to trillion-dollar deficits (the President has overseen four-straight annual budget deficits in excess of $1 trillion). It reduces the fiscal year 2013 deficit to below $800 billion. It reduces the deficit by $3.3 trillion relative to the President’s budget over the next ten years. And it sharply reduces publicly held debt as a share of GDP over its first ten years. By contrast, the President’s budget increases it by 11 percent and allows government’s fiscal position to “deteriorate” after that.
Q: I heard that this budget actually increases deficits. Is this true?
A: No. The people who are making that claim are comparing The Path to Prosperity to a false reality. This false reality assumes that the President and a majority of members of Congress will, contrary to their stated policy preferences, allow a $4 trillion tax hike to hit the American people after 2012.
This false reality also assumes that the government will allow the poorly designed Alternative Minimum Tax ensnare a growing number of middle-class families. And it assumes that the government will slash payments to doctors who treat Medicare patients by over 20 percent.
We reject the massive tax hikes on job creators and sharp Medicare cuts on current seniors that are embedded in current law, as do most policymakers. Relative to a more realistic, current policy baseline, The Path to Prosperity reduces deficits by $3.9 trillion over the next decade. Relative to the President’s budget, The Path to Prosperity reduces deficits by $3.3 trillion over the next decade.
Q: I heard that this budget makes the debt problem worse over time. Is this true?
A. No. The Path to Prosperity pays off the debt.
The President’s budget continues to add to the debt and proposes no reforms that get the budget to balance or pay off the debt. By clinging to the unsustainable status quo, the President’s budget commits our nation to a debt-fueled economic crisis.
Under the CBO’s alternative fiscal scenario, which uses a realistic baseline of current policies, CBO projects publicly held debt as a share of the economy to reach 96 percent of the economy in 2023, 128 percent in 2030, and 194 percent in 2040.
By contrast to the crisis to come under either the President’s budget or the status quo, The Path to Prosperity lifts the crushing burden of debt, making it possible for the economy to grow and for Americans to prosper. This budget would cut trillions of dollars from the debt relative to the current path in every year of CBO’s long-term analysis. In 2023, the debt would be more than 36 percent lower than would be the case under the status quo; 59 percent less in 2030; and 80 percent less in 2040. By 2050, this budget would reduce debt relative to the size of the economy to only 10 percent and eventually pay off the debt in its entirety.
Q: How is it possible to pay off the debt over time without raising taxes? Don’t you have to cut discretionary spending to unprecedented lows?
A: The trend of discretionary government spending growing as fast or faster than our economy, which has occurred under Presidents and Congresses of both parties, is one that simply cannot be sustained. The federal government cannot continue to chase ever-higher government spending by taking ever-more from hardworking taxpayers and burying the next generation ever-deeper under a crushing burden of debt.
Instead, The Path to Prosperity advances reforms that modernize the federal government so it can deliver on its critical responsibilities in the 21st century. It delivers real spending discipline, not through indiscriminate cuts that endanger our military, but by ending the epidemic of crony politics and government overreach that has weakened confidence in the nation's institutions and its economy. And it strengthens the safety net by returning power to the states, which are in the best position to tailor assistance to their specific populations.
Instead of taking more from hardworking taxpayers as the President proposes, The Path to Prosperity advances bold tax reform to grow the economy – and the faster the economy grows, the more revenue the government will have to meet its priorities and start paying down the debt.