- The Progressive Pulse - http://pulse.ncpolicywatch.org -

End of government shutdown in sight, sets up chance for big budget deal down the road

As multiple [1] news [2] outlets [3] are [4] reporting [5], Congress appears poised to secure a deal that re-opens the federal government, allows the US Treasury to pay its bills by lifting the debt limit, and establishes formal talks to develop a long-term strategy for putting our nation’s fiscal house in order. Assuming Congress passes the deal, these new negotiations set up the opportunity for a new approach to the federal budget—one that includes new revenues to support our economy rather than new spending cuts that increase poverty.

The deal itself [3] is straightforward and includes no significant policy concessions [6] to members of the US House of Representative who precipitated the government shutdown as part of efforts to repeal the Affordable Care Act. For details on the deal, see below the fold:

 

 

 

 

As Congress turns to crafting this comprehensive budget deal, federal policymakers must pursue a more responsible path that looks at new revenues not just spending cuts to resolve our fiscal challenges.  Since 2011, almost three-quarters of debt reduction has come from spending cuts [7], and as a result, key domestic initiatives like K-12 education, food safety inspections, and research and development are now at the lowest levels as a share of the economy since the 1950s [8].

Along with the across-the-board sequestration spending cuts set to take effect in January, these cuts have already affected the state’s economic recovery and caused challenges for families, seniors, children and workers in our state. They’ve likely deepened poverty and hardship [9] for the citizens of our state.  This kind of fiscal austerity has cut economic growth in half this year [10], and will only cause more damage in the future.

And aside from the human and economic cost of more spending cuts, there’s just no pressing fiscal justification. The federal budget deficit has fallen by more than half since 2009 [11], and the long-term deficits have also dropped due to falling healthcare costs.

Instead of embracing additional spending cuts to domestic initiatives that will likely grow poverty, Congress should look at hidden corporate tax code spending as a source for raising new revenues. This is the largest portion [7] of the federal budget and presents the best target for reducing the federal budget deficit over the long term.

Altogether, this deal represents a positive step forward, and although it continues sequestration into 2014, it presents a firm opportunity for replacing future rounds of cuts with additional revenues.