Deficit reduction: Is Obama's $4 trillion goal big enough?
Though their plans differ dramatically, President Obama and the GOP agree that the deficit needs to be reduced by about $4 trillion over the next 10 to 12 years, in order to reassure credit markets and get the debt under control.
President Obama set what sounds like an ambitious target this week: Cut the federal deficit by a total of $4 trillion over the next dozen years.Skip to next paragraph
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But for all the attention on the number – $4 trillion – it's not so obvious how big that number really is.
Is it too small to dent the nation's federal debt problem? So big that the resulting austerity will be draconian? Or a Goldilocks amount – just the right balance for taxpayers and the economy?
First, for context, the president's number would not eliminate budget deficits. Rather, he's seeking to reduce annual deficits to a level where the economy is growing faster than the national debt. The result, if Mr. Obama's goal is achieved, would be that public debt would begin to decline as a percentage of gross domestic product (GDP).
Some nonpartisan experts on government finances say the Obama number is a good start, but that it falls a bit short of what the country needs.
"The plan itself contains less in savings than the White House Fiscal Commission recommended, which we look at as the minimum of what is needed to reassure credit markets and get our debt levels back on track," the Committee for a Responsible Federal Budget said in a statement Wednesday.
Obama's plan seeks a level of deficit reduction in 12 years that the fiscal commission sought in a nine-year period, says the nonprofit group, which includes Democratic and Republican advocates of fiscal responsibility.
Of course, that's just one take on Obama's target. Still, that's a view from a centrist organization that thinks a lot about the nation's debt problems.
To the right of Obama, many Republicans would like to see a balanced-budget amendment to the US Constitution, including a cap on federal spending as a share of gross domestic product (GDP). Such an amendment might allow a bigger reduction in deficits.
To Obama's left, some Democrats are outlining budget visions that don't make such steep cuts.
For example, Rep. Chris Van Hollen (D) of Maryland this week introduced a budget proposal for House Democrats. The plan seeks to cut the deficit by $1.2 trillion more than the budget Obama introduced earlier this year, but significantly less than the plan announced Wednesday.
Members of both parties generally agree that the public debt is a serious danger to the economy, and that policymakers can't afford to delay much longer in crafting long-term plans to hold the debt in check.