In April, the Congressional Budget Office released its updated budget projections, and the outlook is grim.
The annual federal deficit is projected to rise to over $1 trillion by 2020 and to top $1.5 trillion by 2028. In the next decade, debt is projected to skyrocket to over 96 percent of the economy.
This is an abysmal and unsustainable budget course for the country to be on.
Thankfully, there is a solution that Congress can implement this year and sharply reverse the projected course.
On Thursday, The Heritage Foundation released its fiscal year 2019 congressional budget proposal, “Blueprint for Balance.” It would reshape the functions of the federal government, focusing spending on its constitutional obligations and nixing programs that fall outside that scope or favor special interests.
>>> Check out The Heritage Foundation’s “Blueprint for Balance”
In the process, the Heritage budget would balance by 2024 and would cut over $11.9 trillion from federal deficits over the next 10 years.
But this blueprint is about more than just making the numbers work. It would free up Americans from an overly burdensome government and allow them to truly thrive. By reducing government debt and taxation, the blueprint would create the conditions for more jobs, higher take-home pay, and a growing economy.
The blueprint would do all this while permanently extending last year’s tax cuts, putting more money in American pockets and sustaining the economic growth already achieved by tax reform. Moreover, the blueprint pursues long-needed reforms to entitlement programs, and in doing so promotes free enterprise and individual freedom.
The Heritage blueprint contains five key elements:
1. Finally bringing spending under control.
Currently, the Congressional Budget Office projects federal spending to grow at a rate of 5.5 percent each year. The Heritage blueprint would reduce that rate to 3.1 percent.
Total federal spending under the plan would fall $12.4 trillion lower than Congressional Budget Office estimates over the next 10 years. By 2024, debt as a share of the economy would begin to shrink, and in 2028 would be nearly 23 percent lower than what the Congressional Budget Office projects.
2. Reforming entitlement programs.
Spending on the three big entitlements—Social Security, Medicare, and Medicaid—is growing unchecked on autopilot. By 2028, spending on these programs will claim over 73 percent of all federal revenues. These programs are simply unsustainable in their current form.
They also come with a heavy price tag for future generations. Tens of trillions in unfunded obligations threaten younger Americans with massive tax increases down the road and a growing pile of debt. The Medicare trustees estimate that by 2026, Medicare will be insolvent. The Social Security Trust Fund will likewise be depleted by 2034.
This blueprint would make a series of decisive reforms: repeal Obamacare; modernize Medicare by transitioning to a premium-support system and making key reforms to meet demographic, fiscal, and structural challenges; cap federal contributions to Medicaid and give states greater flexibility in designing benefits and administering the program; give states more responsibility in running welfare programs; and make critical reforms to Social Security to ensure seniors are protected from poverty in retirement while accounting for increased life expectancy and reducing the growth in benefits.
3. Prioritizing essential discretionary spending and cutting wasteful programs.
The Heritage budget would reject the irresponsible spending increase that resulted from the Bipartisan Budget Act of 2018, reducing nondefense discretionary spending by almost $200 billion in fiscal year 2019 alone. This would be achieved by getting rid of programs that benefit special-interest groups at the expense of taxpayers; programs that would more effectively be run by the private sector or state and local governments; and programs that don’t fall under the federal government’s core constitutional responsibilities.
By moving resources away from less critical domestic programs, the blueprint is able to prioritize defense funding to ensure our military is properly equipped to handle rising global tensions.
4. Permanently extending the Tax Cuts and Jobs Act.
The Heritage blueprint would permanently extend the Tax Cuts and Jobs Act of 2017, giving taxpayers more than $400 billion in additional tax cuts over the next decade. The blueprint also calls for additional tax reform measures, such as moving to a consumption tax base rather than the hybrid income-consumption base currently used. This would help businesses as well as American workers and families while boosting economic growth.
5. Fixing the broken budget process.
The blueprint would take immediate steps to create a more accurate, accountable, and transparent budget process. Major reforms include: a statutory spending cap on all spending, enforced by sequestration; cracking down on budget gimmicks; stopping spending on unauthorized programs; and accounting for interest cost when providing budget estimates of legislation, among others.
These reforms would go a long way toward ending the dysfunction that now dominates our budget process.
For too long, Congress has kicked the can down the road on these critical reforms. Now, we are quickly running out of road.
Heritage’s “Blueprint for Balance” contains the changes our budget has long needed. It would put the budget back on a path toward balance, and our nation on a path toward fiscal health.