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Investing in America’s Economy
A Budget Blueprint or Economic Recoveryand Fiscal Responsibility
NOVEMBER 29, 2010
A PARTNERSHIP OF
Investing in America’s Economy
A Budget Blueprint or Economic Recoveryand Fiscal Responsibility
NOVEMBER 29, 2010
A PARTNERSHIP OF
About this report
Tis report was prepared or
Our Fiscal Security
, acollaborative eort o Demos, the Economic Policy Institute (EPI), and Te Century Foundation (CF).Te project is dedicated to promoting an economic paththat achieves scal responsibility without underminingour national strength. Te primary authors o the reportare Becky Tiess (EPI) and Andrew Fieldhouse (EPI),under the guidance o Greg Anrig (CF), amara Draut(Demos), and John Irons (EPI). Heather McGhee(Demos) contributed to the section on deense spending,Maggie Mahar (CF) to the section on health care,and Josh Bivens (EPI) to the section relating pubicinvestments to economic growth.Tis report reects the belie that the rst priority or our nation is to secure the undamentals o theeconomy: strong growth and good jobs. In order toreduce our long-term national debt we must reuel theengine o our economy: the middle class. We strongly oppose the idea that America’s scal challenges should besolved by cutting longstanding social insurance programsthat have brought security and prosperity to millionso Americans. Troughout the “Great Recession” andits painul atermath, those programs have provento be eective mechanisms or limiting widespreadcatastrophic hardship. We believe that a sound scal path must ollow somebasic guidelines:
1.Jobs frst.
Jobs and economic growth are essentialto our capacity to reduce decits, and there shouldbe no across-the-board spending reductions untilthe economy ully recovers. In act, eorts to spur job creation today will put us on a better economicpath and create a solid revenue base. We believethere should be no consideration o overall spendingreductions until unemployment has allen to 6%and remained at or below that level or six months(Irons 2010a).
2.Stabilize debt.
Over the long term, national debtas a share o the economy should be stabilized andeventually brought onto a downward trajectory.
3.Build on economy-boosting investments.
We mustbuild and maintain initiatives that directly supportlong-term job and economic growth. Failing toinvest adequately in these eorts – or sacricingthem to short-term decit reduction – would be adereliction o sound public management.
4. Target revenue increases.
Revenue increases shouldcome primarily rom those who have beneted mostrom the economic gains o the last ew decades.
5. No cost shiting.
Debt reduction must be weighedagainst other economic priorities. Policies thatsimply shit costs rom the ederal governmentto individuals and amilies may improve thegovernment’s balance sheet but would worsen thecondition o many Americans, leaving the overalleconomy no better o.Putting our nation on a path o broad prosperity will require generating new jobs, investing in key areas,modernizing and restoring our revenue base, and greatly increasing the cost efciency o the health care system. Achieving these goals, however, will require an inormedand engaged public to help set national priorities.Tis report puts orth a blueprint that invests in America and creates jobs now, while putting the ederalbudget on a long-term sustainable path. We documentthe hard choices that need to be made and suggestspecic policies that will yield lower decits and asustainable debt while preserving essential initiatives andinvestments.
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