1) Will putting the Fiscal Commission plan in place derail the economic recovery?
No – in fact quite the opposite is true. A sustained economic recovery will be impossible without a credible plan to get our medium- and long-term fiscal situation under control. And though a plan should be enacted immediately, the Fiscal Commission plan would reduce the deficit very gradually to avoid adversely impacting the recovery in the immediate term. No deficit reduction would begin until 2012, and there would be no nominal spending cuts or revenue increases until 2013.
Having a strategy for getting our national debt to a manageable level will send a signal to global credit markets that the U.S. is, and will continue to be, a good place to invest. In fact, the economic recovery could very well receive a boost from enactment of a credible deficit reduction plan.
The Commission also made the promotion of economic growth and competitiveness a priority in its plan. On the spending side, the plan would maintain or increase important funding for education, infrastructure, and high-value R&D, and provide for establishment of a Cut-and-Invest Committee that would identify low priority or duplicative spending that can be eliminated in order to free up resources for high-value investments. On the tax side, the plan would drastically reduce rates and reform the corporate code in order to promote economic growth and make the U.S. more competitive.