Cut to Invest: Establish a 'Cut-to-Invest Commission' to Reduce Low-Priority Spending, Consolidate Duplicative Programs, and Increase High-Priority Investments
Note: The Brookings Institution released a paper today entitled ‘Cut to Invest: Establish a 'Cut-to-Invest Commission' to Reduce Low-Priority Spending, Consolidate Duplicative Programs, and Increase High-Priority Investments’ Written by Paul Weinstein Jr., an adviser to the Committee for a Responsible Budget and the Moment of Truth Project. The paper fleshes out the details of how the Cut and Invest Commission proposed by the Simpson-Bowles Commission could work in practice.
In order to locate resources for needed investments in the context of deficit reduction, the federal government should create a bipartisan "Cut-to-Invest Commission" (CIC) to identify $200 billion over 10 years in budget savings, freeing up $100 billion for high-priority investments in industrial innovation, advanced industries, clean energy, infrastructure, education, and skills-building, and $100 billion for deficit reduction.
Accelerating the nation’s current sluggish pace of recovery from the Great Recession is ultimately going to require increased investment in the things that spur lasting growth: research and development (R&D), advanced industry exports, infrastructure, education, and skills-building.
However, given the current fiscal climate—with federal debt held by the public expected to reach over 90 percent of GDP in 2020 under current policies and spending as a percentage of GDP already at historically high levels—the prospect of identifying new, dedicated sources of revenue for public investment appears wholly unrealistic, both politically and from a budget perspective.
Where, then, can policymakers find the funds needed for public investment at a moment of fiscal constraint? One approach is to identify redundant, wasteful, and ineffective programs and reduce or eliminate (cut) them; and then redirect some of the savings (invest) to priority areas with the potential for significant public benefits.
Building on work in the 1990s by Robert Shapiro, then of the Progressive Policy Institute and Bill Clinton’s principal economic advisor in the 1991-92 campaign, such an approach holds out real promise for squaring the goals of fiscal discipline and institutional reform with the need to expand support for the specific public investments that make people and firms more productive. Only through such means will Congress be able to scrape away inefficient, obsolete, and actually counter-productive spending programs so as to free up resources for reducing the debt and investing in growth.
Click here to read the full PDF version of this paper.
In order to locate resources for needed investments in the context of deficit reduction, the federal government should create a bipartisan “Cut-to-Invest Commission” (CIC) to identify $200 billion over 10 years in budget savings.