Center for American Progress Report Challenges Austerity

The Center for American Progress (CAP), an organization that is generally supportive of Obama administration policies, has decided to part ways with the administration on the need for continued deficit reduction. In a new report, "It's Time to Hit the Rest Button on the Fiscal Debate," the organization argues that it is time to shift from deficit reduction to growing the U.S. economy.

"Pursuit of a grand bargain while conservatives in the House remain intransigent on revenues is not bearing fruit and we continue to live under the growth-harming sequester," the organization's president, Neera Tanden, told The Huffington Post. "Right now, Washington is focused on the wrong problem: promoting austerity policies now to massively reduce the deficit rather than focus on economic growth," she said. "Our report demonstrates that right now, we face a growth challenge."

According to the new report, federal budget deficits are already trending downward. The national debt as a share of the economy is expected to remain flat for the next several years without any additional deficit reduction efforts (see graphic below).

Much of this is due to deficit agreements reached over the past few years, with most of the deficit reduction coming from cuts in "discretionary" spending (spending on programs such as education and health research). Meanwhile, slower-than-expected inflation in the health care sector has lowered expected growth in spending on such programs as Medicare and Medicaid (health care spending is one of the principal drivers of longer-term budget deficits).

According to CAP's analysis, these changes have meant that the debt has stabilized even without sequestration and, for this reason, the report urges Congress to repeal sequestration for federal fiscal years 2014-16.


Given similar rumblings about austerity from other organizations such as the Center on Budget and Policy Priorities, is it possible that the administration itself is listening and preparing to change course? That remains to be seen.

When The Huffington Post asked the administration for comment, Amy Brundage, a White House spokeswoman, said the latest deficit reduction offer made by the president to House Speaker John Boehner – which included cuts in the Social Security program – "remains on the table."

For more background on austerity, visit the Center's Budget Austerity Update page and Sequestration Central.

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