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Concord Coalition: President's budget would stabilize debt, but not put it on sustainable path

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Concord Coalition: President's budget would stabilize debt, but not put it on sustainable path

Long-term issues with entitlements not addressed.

Advocacy group The Concord Coalition said today that while President Obama's proposed budget would lower projected deficits and keep the debt stable as a share of the economy over the next 10 years, it would do so with a mix of policy options that have no chance of being enacted by a Republican Congress and would not, in any event, put the debt on a sustainable downward path.

"The budget leaves in place a dynamic that will be increasingly difficult, if not impossible, to maintain," said Robert L. Bixby, Concord's executive director. "As Social Security, Medicare and Medicaid grow on autopilot, funding for other programs will be squeezed and revenues will need to rise. That's what happens in this budget. Even with the new investment initiatives, discretionary spending is essentially held flat over 10 years while mandatory programs account for almost all of the non-interest spending growth. Revenue increases of nearly$3 trillion are needed to keep deficits from steadily rising."

Under the proposed budget the administration officially unveiled today, spending would rise from 21.5% of GDP in 2017 to 22.8% in 2026, while revenues would rise from 18.9% of GDP next year to 20% in 2026. At the end of the projection period, the President's budget estimates spending and revenue would be well above their historical averages. Debt held by the public would decline relative to the size of the economy, going from 76.5% of GDP this year and in 2017 to 75.3% in 2026.

The president's plan calls for additional funding for an array of domestic programs that include Medicaid expansion, clean energy initiatives, transportation infrastructure, cancer research, conservation work, jobs training and improved access to higher education. In addition, the administration wants funding to strengthen the US commitment to NATO.

Spending would rise from 21.5% of GDP in 2017 to 22.8% in 2026, while revenues would rise from 18.9% of GDP next year to 20% in 2026.

"While the administration deserves credit for suggesting ways to fund its additional spending plans, that alone is insufficient," Bixby said. "As the Congressional Budget Office recently warned, we are already on track to add trillions to the debt over the coming decade as the result of an aging population, rising health costs and rapidly increasing interest payments. And if funding mechanisms are used to finance new spending, they will not be available to help meet the promises and obligations the government already has in place."

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