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Lawmakers should focus on simplifying the federal tax code, creating stability, and broadly improving economic incentives. There are incremental steps that can be made on the path to fundamental tax reform.
The price tag of the Inflation Reduction Act’s green energy tax credits is much higher than originally thought. Among other things, the updated analysis indicates the Inflation Reduction Act does not reduce deficits after all.
Any serious proposal to tackle the emerging debt and deficit crisis must also address our largest mandatory spending programs: Social Security and Medicare. Together, these two programs will be responsible for nearly 80 percent of the deficit’s rise between 2023 and 2032, according to Congressional Budget Office (CBO) projections.
Rather than continue down the path of growing debt, lawmakers should craft a comprehensive solution. International experience cautions against tax-based fiscal consolidations, but modest tax increases may be part of a successful debt reduction package.
According to the International Monetary Fund (IMF), the U.S. federal government is among the most indebted governments in the world.
As policymakers look to tackle America’s debt and deficit crisis, they should consider international experiences on successful fiscal consolidations.
Immediately balancing the $20 trillion budget shortfall would take drastic, unwanted policy changes. Instead, lawmakers should target a more achievable goal, such as stabilizing debt and deficits with an eye toward comprehensive tax reform that can produce sufficient revenue with minimal economic harm.
Federal tax collections are approaching the highest levels in U.S. history set during World War II and again during the dot-com bubble in 2000. Meanwhile, federal spending in FY 2022 was over 25 percent of GDP—a level only exceeded during the height of the pandemic in 2020 and 2021, and during World War II.
While there is more we can do to encourage lower- and middle-class households to save more and build wealth, a closer, more comprehensive look at the data and trends in other countries suggests that America’s wealth gap is not as alarming as some may think.
The latest CBO long-term budget outlook paints a troubling picture of fiscal irresponsibility. Rather than halt this rampant spending, Congress is actively adding programs that will exacerbate these long-term trends.