States Offer Examples of Meeting Fiscal Challenges
February 17, 2013
With the next installment of the fiscal cliff looming, the U.S. government continues down an unsustainable long-term fiscal path. In the words of the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles) in its December 2010 report, “The Moment of Truth”: “The problem is real. The solution will be painful. There is no easy way out. Everything must be on the table. And Washington must lead.”
The bottom line: Our massive debt and even larger long-term fiscal obligations cannot be met under current law. The Government Accountability Office has projected that, left unchecked, interest on the debt and Social Security alone would eat up 100 percent of federal revenue by 2040. This problem will not be solved by any one or even a combination of actions, such as growing the economy, reducing fraud, waste and abuse, wringing out additional administrative efficiencies, or making changes at the margin. We face gut-wrenching policy decisions on spending and revenue alternatives, and we must have a candid conversation about our national obligations, priorities and needed resources.
States have been facing their own fiscal challenges head on as they do not have the federal government’s vast borrowing power or the ability to print money. Kicking the can down the road was not an option. From the state experience, we identified 10 drivers that can facilitate meaningful deficit reduction