On July 21st, the Tax Foundation is hosting a webinar discussion on debts, deficits, and solutions that place the U.S. on a path to fiscal sustainability.
The debt ceiling deal, negotiated by House Speaker McCarthy and President Joe Biden, temporarily limits discretionary spending, along with a few other changes. While the deal cuts $1.5 trillion in spending, it pales in comparison to the $80 trillion of spending over the next decade. Stabilizing the debt as a share of the economy would require $8 trillion in deficit reduction over that period.
In the near future, monumental fiscal changes will happen if Congress fails to act. In 2025, the scheduled expiration of the Tax Cuts and Jobs Act will raise taxes by $3.5 trillion over the next decade, impacting many individual taxpayers. That same year, the debt ceiling is due to be reinstated and will likely need to be raised as the CBO projects the deficit will exceed $1.6 trillion on the way to $2 trillion by the end of the decade due to growing shortfalls in Medicare and Social Security.
Other countries have faced similar debt and deficit issues and stabilized their debt, finding the correct balance between spending and taxing adjustments. Research from the OECD and IMF suggests that modest tax increases on consumption paired with spending reductions are the most successful at addressing debt and deficits. But, some taxes harm economic growth more than others, counteracting deficit reduction efforts.
To explain the issues and potential solutions, the Tax Foundation is hosting a panel discussion, moderated by Will McBride, Vice President of Federal Tax Policy and Stephen J. Entin Fellow at the Tax Foundation, and joined by:
- Erica York, Senior Economist and Research Manager
- Brian Riedl, Senior Fellow at the Manhattan Institute
If you would like to join the webinar, please register.