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Email this citationCIAO DATE: 10/05
Restoring Fiscal Sanity 2005: Meeting the Long-Run Challenge
Alice M. Rivlin and Isabel B. Sawhill
April 2005
Foreword
One of the staples of American public debate is concern over the solvency of Social Security, the complexity of the tax code, the rising cost of health care, deficits in the federal budget, the nation's escalating debt to Asian central banks, and other perceived threats to our economic future. It is hard—but important—for citizens to evaluate the seriousness of these issues or the efficacy of the various proposals offered to solve them. This book is designed to help in that regard. It forecasts future pressures on the federal budget and offers a guide for judging the pros and cons of potential solutions and the political obstacles to their adoption.
At issue, both literally and figuratively, is the health of the country. Americans are living longer, and medical care is becoming both more effective and more expensive. The confluence of these two trends adds to the burden borne by the federal budget. Dealing with that growing problem will require Americans to make hard choices about what they want the federal government to do and how they want to pay for it. If current trends and policies continue, the cost of promises made to older peoplewill require raising federal taxes to unprecedented levels or slashing other federal activities to levels not seen in the past half-century. These choices are complicated by the fact that the federal budget is already running a worrisome deficit that is projected to continue if policies are not changed.
Last year, in Restoring Fiscal Sanity: How to Balance the Budget, two Brookings economists, Alice Rivlin and Isabel Sawhill, assembled a team of experts who presented three options for reducing the deficit over the coming decade: one that emphasized spending cuts, one that relied on tax increases, and one based on a mixture of the other two. In this sequel, Alice and Belle have taken those options as a starting point to focus on the longer-run challenges posed by an aging population and escalating medical costs. It offers solutions that will have some appeal to those who believe government should do less, as well as to those who feel it should do more. It highlights the importance of thinking clearly about the size and role of government and of finding ways to overcome the political obstacles to taking action.
Despite its gimlet-eyed assessment of looming threats to the national well-being, this is not just a constructive piece of work but an essentially hopeful one. The authors believe that fiscal pressures provide an opportunity for needed reforms in the health care system, the federal tax code, and the Social Security system. These experts write from varying perspectives, but in the spirit of open-mindedness and collaboration that is crucial to the way we operate at Brookings; they have worked together to help the public understand the issues, using even their disagreements to illuminate the complexity of the trade-offs and policy challenges. Whatever their differences, the authors share a common objective of contributing to a civil and wide-ranging public dialogue and thus, ultimately, to better-informed political decisions.
