At a hearing before the House Budget Committee last week, former Clinton White House Chief of Staff and current President of the Center for American Progress John Podesta advocated for a long-term approach to reducing deficits and bringing back a balanced budget. For all the hyperventilating over the debt and deficits currently going on in Washington and around the country, Podesta's approach is the closest thing I've seen to a sane plan.

Podesta prefaced his remarks before the Budget Committee by acknowledging that congressional leaders face an exceptionally difficult challenge ahead in beginning to rein in long-term deficits without killing off government spending-induced economic growth. Because while "failing to adequately address long-term deficits ... threatens to result in a number of negative consequences," including reducing domestic investment, raising interest rates, and spurring inflation, overcorrecting "would both jeopardize our economy and kill the prospect of job growth."

Those are important points, because I think much of the talk surrounding deficits assumes that government spending, particularly the stimulus, is wasteful and out of control. It is, in fact, the exact opposite: it has been government spending that has kept us out of a much worse recession, and, as far as stimulus goes, the country needs more, not less, at least in the short-term.

With that said, Podesta went on to pitch his non-profit's recent proposal for getting long-term deficits under control. The plan calls for Congress to adopt a set of annual targets where they gradually increase the primary revenue-to-spending ratio so that by 2014, primary revenue is equal to programmatic spending. When total revenues equal total spending with the exception of debt service payments, you have a primary balanced budget, and, as a near-term goal, Podesta says it will help keep Congress on track. The ultimate goal would be to reach a completely balanced budget where revenue covers all spending by 2020.

The enforcement mechanism for this plan is a strong version of statutory PAYGO. Under the proposal, there would be no exceptions for increased spending, including defense and tax expenditures: if you wanted to increase spending, you would have to make tradeoffs somewhere else in the budget. And, sequestration, the penalty for failing to make tradeoffs, would not only cut spending, but also raise taxes.

At first blush, the plan seems very broad and lacking in any recommendations for tackling some of the harder questions associated with the budget and deficits. But, of course, that's the idea. Previous attempts to foist specific budget-balancing schemes on Congress have failed miserably, and, as the 1990s showed, setting strict parameters but giving lawmakers the choice of how to move within them seems to provide the best chance of success.

Image by Flickr user Center for American Progress used under a Creative Commons license.