Senate Majority Leader Mitch McConnell and Minority Leader Charles Schumer released a bipartisan budget proposal this week.
Why it matters: Congress currently faces a Thursday night deadline to avoid another government shutdown. The proposal would also add hundreds of billions of dollars in new federal spending over two years.
Senior Research Fellow Veronique de Rugy wrote earlier this week on the need for cuts in federal spending to ensure our future economic growth and fiscal health, and on the looming threat of $1 trillion deficits.
- There is a consensus in the academic literature on debt reduction that focusing primarily on spending cuts instead of tax increases is key to long-term success
- Governments that have successfully reduced their debt-to-GDP ratio also tend to focus on reforming social programs like Medicare and Social Security
- Congressional Budget Office data show that more than 80 percent of spending growth comes from Social Security, healthcare, and interest payments on the debt.