Economics, Governance Tax & Budget
June 27th, 2024 2 Minute Read Press Release

New Report: A Comprehensive Federal Budget Plan to Avert a Debt Crisis

NEW YORK, NY — Last week a new CBO report updated its federal budget deficit projections to the tune of $1.9 trillion for FY2024. That’s $400 billion more than it estimated in February. Under current policies, annual deficits are likely to reach $3.8 trillion within a decade—or exceed $4 trillion if interest rates remain elevated. Within three decades, the debt is projected to reach 236% of the economy, with interest costs consuming half or even three-quarters of all federal tax revenues. At some point, the financial markets will no longer be willing or able to finance this exorbitant debt, interest rates will soar, and the federal government will not be able to pay its bills, with dire consequences for the U.S. economy. These projections make one thing certain: Washington is on an unsustainable fiscal path. 

In a new Manhattan Institute report, senior fellow Brian Riedl outlines what it will take to avert a debt crisis. This blueprint is not the typical conservative or liberal fantasy scenario. Instead, it is designed for a moment in which Republicans and Democrats finally agree to sit down and together build a sustainable, bipartisan, debt stabilization blueprint. Thus, the 30-year blueprint is realistic, bipartisan, specific, and fully scored by outside experts. It respects the values and deal-breakers that both conservative and liberal lawmakers would bring to the table—to the extent feasible while still achieving the substantial required savings. None of these savings proposals are easy or popular, but this blueprint specifies what it truly takes to realistically stabilize the federal debt. 
The report divides reforms into four tiers: 

  • Tier 1: Squeeze out inefficiencies from the major health programs driving spending upward. 
  • Tier 2: Trim Social Security and Medicare benefits primarily for upper-income retirees (who can most afford the changes). 
  • Tier 3: Trim other federal programs to the extent feasible on a bipartisan basis. 
  • Tier 4: Close the remaining gap with new taxes in the least damaging manner possible. 

Click here to view the full report.


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