This week saw the start of budget negotiations between the House of Representatives and Senate. But as Republicans and Democrats sit down together less than a month after a government shutdown, will the two sides be able to find common ground? Global Public Square asked 12 commentators, analysts and policy makers for their take on what Congress should be discussing – and what an agreement should include. All views expressed are the writers’ own.
Create a national infrastructure bank – Fareed Zakaria, CNN
If Republicans and Democrats could stop posturing, they would find that they could support a simple, powerful program that would reduce unemployment, make America competitive, privatize an important realm of economic activity, and get rid of earmarks. It is a national infrastructure bank to rebuild America's decaying infrastructure.
America's infrastructure is in a shambles. Just a decade ago, we ranked sixth in infrastructure in the world according to the World Economic Forum. Today we rank 23rd and dropping.
Currently, the United States government funds and operates almost all American infrastructure. It’s a quasi-socialist approach.
By Bruce Stokes, Special to CNN
Editor’s note: Bruce Stokes is director of global economic attitudes at the Pew Research Center. The views expressed are his own.
The forced budget cuts, known in Washington as sequestration, are now in force in the United States and $85 billion in spending cuts are in the process of being implemented, with about half of them coming out of Washington’s spending on international engagement. The impact on America’s capacity for global leadership will not be felt overnight. But these reductions in defense spending, anti-terrorism activities, foreign aid and the budget for the State Department will shrink the U.S. footprint around the world, with consequences for the projection of both U.S. hard and soft power.
In the wake of the sequester, the questions now heard outside the United States include “what does this say about Americans’ willingness to pay for future global commitments?” “How much of this austerity is driven by Tea Party sentiments and influence?” And, most broadly, “are American fiscal rectitude and isolationism converging?”
The answers are not clear cut – in part because it’s possible that the Obama administration and Congress will rejigger the terms of the spending cuts in the months ahead.
Editor's Note: Mackenzie Eaglen is a fellow in national security at the American Enterprise Institute. Michael O’Hanlon is senior fellow at Brookings and author of The Wounded Giant: America’s Armed Forces in an Age of Austerity.
By Mackenzie Eaglen and Michael O’Hanlon - Special to CNN
Last year, the Joint Select Committee on Deficit Reduction, also known as the “super committee,” failed to agree on over a trillion dollars in budget cuts. This failure has triggered the looming “sequestration” of an additional $500 billion in defense dollar cuts over the next 10 years, among other mechanical cuts to other parts of the budget. But you wouldn’t know that from the budget released this week by President Barack Obama. Rather, Obama’s budget numbers hue closely to those in last year’s debt ceiling deal known as the Budget Control Act, as if the super committee had never existed. This is understandable at one level. But ignoring reality will not make the most drastic cuts to the military in U.S. history go away.
Sequestration was written into the budget control act as a Sword of Damocles over the super committee and Congress. Few favored it or even considered it a plausible outcome, and even today, not many appear to take it seriously. Rather, Congress, the White House and the Pentagon have embraced the hopeful but irrational belief that the necessary spending cuts or revenue increases to offset restoring the next $500 billion will happen during the expected lame duck session of Congress after the November elections. The hope appears to be that one party will have a clear mandate by then, or that a looming crisis will force rationality upon lawmakers. But the crisis is already looming. And since when do we expect clear mandates from elections, especially when the country’s politics are so closely divided? FULL POST
Editor's Note: Michael O’Hanlon was in Afghanistan earlier this month and is the author of the new ebook, The Wounded Giant: America’s Armed Forces in an Age of Austerity. You can read more from him on the Global Public Square.
By Michael O'Hanlon – Special to CNN
As the full details of President Obama’s new defense strategy and budget plan come out this week, I still have a few questions about what appears overall to be a well conceived plan for a leaner and somewhat less expensive American military.
My greatest concern is also the broadest: Even as the military is making cuts, and other so-called discretionary accounts are doing so too, entitlements remain spared by Democrats and tax increases of any sort remain anathema to Republicans. We cannot balance the budget on the 40 percent of federal spending within the so-called discretionary accounts. A broader approach is badly needed. If politics make that difficult now, we at least need informed debate on what either party would do to cut deficits by at least two-thirds if given the chance by voters in November.
Editor's Note: Edward Alden is a senior fellow at the Council on Foreign Relations, where he writes the blog Renewing America. The following is reprinted with the permission of CFR.org. The views expressed in this article are solely those of Edward Alden.
By Edward Alden, CFR.org
What should Congress and the Obama administration do to bring the federal deficit under control? Well, according to the Congressional Budget Office’s annual Budget and Economic Outlook, the answer is quite simple: absolutely nothing at all.
For all the campaign talk of the United States facing a spiraling federal budget deficit leading to a crippling debt burden for future generations, the laws already passed by Congress and signed by the President are set to bring the budget under control surprisingly quickly. Under the so-called “baseline” assumptions, even with modest economic growth projections, the federal deficit is currently set to shrink from $1.3 trillion in 2011, or 8.7 percent of GDP, to just $196 billion, or 0.9 percent of GDP, by 2018. While the numbers will start creeping up slightly after that, and debt service costs will nearly double, the budget situation will remain entirely manageable and, barring an unexpected spike in interest rates, produce nothing close to a fiscal crisis. The debt-to-GDP ratio would fall from 75 percent to 62 percent by 2022. FULL POST
Editor's Note: Lawrence J. Korb is a Senior Fellow at the Center for American Progress and was Assistant Secretary of Defense from 1981 to 1985.
By Lawrence J. Korb - Special to CNN
As the President and Congress decide how to implement the reductions in projected levels of defense spending necessitated by the Budget Control Act and possibly sequestration, the pay and benefits of military personnel and military retirees – which now total about $250 billion a year – can and should be on the table. These benefits must be cut because if we do not, there will not be enough money for modernization and readiness.
Opponents will argue that if we make any reductions in his area we will be breaking faith with those who have served and are serving. But close analysis reveals that these claims cannot be substantiated. This can be demonstrated by examining the three components of personnel costs, namely, pay and benefits for active duty people; military retirement pay; and health care for military retirees. FULL POST
Take a look at Fareed Zakaria's interview with one of the men behind the Simpson-Bowles plan, Alan Simpson. The former Republican Senator from Wyoming examines the GOP presidential contenders, and what Washington needs to do about the deficit.
FAREED ZAKARIA: Do you think that Mitt Romney has now wrapped up the nomination for all intent and purposes?
ALAN SIMPSON: I think that's very possible because they've washed all the laundry of his that they could ever find. Now they're going to start washing the laundry of Rick Santorum, who has not had his laundry washed yet.
Every one that rose to the top here has suddenly created a great deal of investigation and examination and Rick Santorum has never had that. And when they got it, the others, who have fallen, all capable people when they got it, they all dropped. FULL POST
By Fareed Zakaria, CNN
Many are bemoaning the super committee’s failure, but I actually don’t see it as such a big deal. Those who are concerned about the budget deficit will see an automatic $1.2 trillion in cuts over the next decade starting at the end of next year. That’s more than anyone thought we’d get beforehand. And those who want tax revenues to increase will see the Bush tax cuts automatically expire at the end of 2012.
So if Congress does nothing, two sequestration processes go into effect: A budget cut and a tax increase. These two measures will cut over $4.5 trillion from the U.S. deficit over the next 10 years. That’s more than the Simpson-Bowles Commission proposed. And as Ezra Klein points out, that’s $3 of tax increases for every dollar of spending cuts. The Republicans' strategy of blocking every deal suddenly doesn’t look so smart.
I think that the real question we should be asking ourselves is whether or not we want these tightening, contractionary measures to occur now when the U.S. economy is still relatively weak. Better policy would be to delay the onset of cuts for a year or two until the economy begins to recover. As long as we can signal to the world, to markets and to ourselves that we have a serious, reliable process in place to deal with the deficit, there’s no immediate urgency.
Editor’s Note: This is an edited version of an article from the ‘Oxford Analytica Daily Brief’. Oxford Analytica is a global analysis and advisory firm that draws on a worldwide network of experts to advise its clients on their strategy and performance.
The world is becoming used to political polarization in the U.S. Congress. Expectations were so low that global reaction to yesterday’s failure by the bipartisan congressional super committee to agree on significant deficit reduction has been subdued.
Markets’ tepid response suggests that the short-term significance of the outcome is limited: It merely postpones necessary fiscal reforms until after presidential elections next November. However, the political implications are significant. And by contributing to perceptions of Washington’s ‘dysfunctionality’ - in the context of Europe’s growing sovereign debt crisis - the failure risks undercutting economic confidence and recovery.
Yet the super committee's failure does not signal that the United States is incapable of addressing such challenges. Indeed, it is arguable that prospects for major fiscal reform are steadily increasing. The failure triggers 1.2 trillion dollars in statutory ‘automatic’ spending cuts from October 2012 (fiscal year 2013). Despite current pessimism, Congress is likely to authorize about 3 trillion dollars in additional consolidation (over a decade) in 2013 - eliminating risk of a fiscal crisis over the medium term. FULL POST