Press Release: Setting The Right Fiscal Target: Policymakers Should Stabilize Debt As Share Of Economy Over Next Decade — Center on Budget and Policy Priorities

Deficits and debt will rise to unprecedented levels in coming decades without major changes in federal budget policies, so policymakers should set a goal of stabilizing the debt as a share of gross domestic product (GDP) over the next decade, the Center on Budget and Policy Priorities reported today.

In its analysis, “The Right Target: Stabilize the Federal Debt,” the Center said that, to reach that goal, policymakers would have to trim projected deficits by more than half— to about 3 percent of GDP — by no later than 2019.

That would be no small achievement. To halve the deficit by 2019, policymakers would need to produce savings that are nearly twice as large as that of any prior deficit-reduction effort. And they would have to do so just as the baby boomers are retiring in large numbers (swelling the ranks of Social Security and Medicare beneficiaries) and health care costs are continuing to grow faster than the economy (driving up per-person costs for Medicare and Medicaid).

While policymakers should focus their attention as soon as possible on reducing the deficit, the report advises against actually having any large deficit-reduction measures take effect until the economy has sufficiently recovered from the recession and is strong enough to absorb them.


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