What's next? Expect bipartisan legislation soon to give the Obama administration more flexibility in targeting the mandatory cuts. Congress will start working this spring on spending and taxes for the next 10 years. House Budget Chair Paul Ryan says his plan, which he released Tuesday, will balance the budget within 10 years, without raising taxes and without "any abrupt hits" to Social Security and Medicare. The across-the-board savings will stay under the GOP plan, but be shifted away from defense. Senate Budget Committee Chair Patty Murray's plan would undo the remaining across-the-board cuts and replace them with a mix of tax increases and other spending cuts. What no one is mentioning is that this will be the first time since 2009 that the Senate Democrats will put forth a budget.
The public is ready for a grand bargain this fall. A long-term plan to reduce the deficit in a targeted, prioritized way will go a long way toward revving up economic growth and creating certainty for consumers and businesses. There's hope that Washington can remove itself as a drag on our economy in the next few months by reconciling a 10-year budget that reduces the deficit in a reasonable way. If so, then we just might start to see where we are heading—and maybe even have a strong tailwind behind us.