By Paul Bedard, Washington Whispers
The Center for American Progress, a close ally of President Obama, today outlined a new plan to balance the budget but said that it shouldn't happen for 10 years. The reason: Doing it now would make the recession worse.
In a new report, "A Path to Balance," CAP does not push for a quick fix to balance the budget and instead recommends a slow approach that doesn't starve the recovery. "We've got to get growth going," said CAP President John Podesta, a former Clinton White House chief of staff. In the meantime, he'd set 2014 as the target date to get the budget in "primary balance," which he explained as having tax revenue equal to spending, minus the money needed to service the national debt.
While he did not say that the White House approves of his outline for a balanced budget by 2020, the former Clinton White House chief of staff is very close to the president and his top staff. His progressive group has featured many of Obama's top aides at conferences and meetings. In its plan, CAP cautions against deficit action that would "slam the brakes on the economic recovery." CAP instead recommends continued deficit spending until the economy recovers and unemployment gets below 6.5 percent. At that time, boosting taxes and cutting spending should come into play, the group says.
Likely to be controversial if the plan is adopted is CAP's balanced-budget enforcement mechanism, which requires automatic tax increases and spending cuts. While a very hard pill to swallow, Podesta said that including it in a budget map would require lawmakers to decide which programs and taxes to keep, raise, or cut. Otherwise, the "sequestration" plan would impose across-the-board tax increases and spending cuts that might be politically distasteful. Podesta also said that the administration should be open to naming a bipartisan commission to study other ways to balance the budget, though he suggested that commissions rarely lead to actual changes.
Read the plan here.