Introduction

America's long-term economic health is at a crossroads. For the last three years, our political leaders have run up a huge tab by enacting excessive and unnecessary tax breaks for the wealthiest Americans and largest corporations, while increasing spending to levels not seen since World War II. For example, the 7.6 percent average annual growth of the federal budget during the past two years is more than double the 3.4 percent average annual growth between 1993 and 2001 under President Clinton. As a result, the surpluses of the 1990s have turned overnight into the largest deficits in history and the size of the national debt is expected to double by the beginning of the next decade.

Despite efforts by the Bush administration and the Republican congressional leadership to hide the true costs of these deficits with gimmicky accounting and budget tricks, the real story about America's deficit crisis is now coming to light. In November 2003, the Congressional Budget Office (CBO) offered a more realistic estimate of the size of the federal deficit. Under CBO's new estimates, deficits will total more than $4 trillion during the next 10 years rather than the $1.3 trillion the Bush administration assumed. Furthermore, according to CBO, the deficits will never drop below $374 billion, the historic high set in fiscal year (FY) 2003 and will rise to a new record of $494 billion this year.

Yet even as the fiscal future of our government dramatically deteriorates, public perception of the seriousness of the problem is lagging. According to one recent poll, only 3 percent of voters listed the deficit as the most important issue facing the country. And Republicans in the administration and Congress, who for decades called for balanced budgets, are now arguing that deficits aren't really important.

But deficits and the nation's rising debt do matter. If we do not address the structural deficits put into place by the Bush administration and the Republican Congress soon, American families will pay more in federal, state, and local taxes, higher mortgage and credit card rates, and higher fees on student loans.

This paper offers a progressive alternative to the administration's borrow-and-spend policies and the tax-and-spend policies of pre-Clinton Democrats. Included is a list of over 50 politically feasible and sound public policy proposals that will slash CBO's "realistic" projected 10-year deficit by close to $2 trillion. The list features a series of spending cuts, government reinvention proposals, budget reforms, and tax reforms that spread the pain of deficit reduction fairly. These savings are achieved in five major areas:

• Cutting the size of the government workforce and administrative costs, including reducing the size of the federal workforce, freezing federal travel, and slashing the number of consultants on the federal payroll;
• Rolling back the Bush tax giveaways to the wealthiest Americans while protecting the tax cuts for middle- and low-income families;
• Creating a commission to reduce corporate welfare expenditures, including both tax breaks and spending programs that aid companies that don't need or deserve the government subsidies;
• Reinventing and consolidating government programs and agencies; and
• Restoring real budget controls including stronger versions of PAYGO and budget caps as well as establishing a constitutionally viable version of the "line-item veto."

Because the Bush administration and the Republican Congress have put us so deep into debt, this commonsense plan will not balance the budget by itself. However, this proposal is a start. If implemented, this plan will put America back on the road to fiscal responsibility, while not wreaking havoc with our economy; enable us to deal more effectively with the coming retirement of the baby-boom generation; and make government more efficient and responsive.

Blueprint Keywords: Extra Deficits

Paul Weinstein Jr. is a senior fellow at the Progressive Policy Institute, chief analyst at the Promontory Interfinancial Network, and an adjunct professor at Johns Hopkins University. Mr. Weinstein is co-author of the textbook "The Art of Policymaking."