Both houses of Congress have now voted to suspend the debt ceiling until May 19, buying lawmakers more time to develop a budget. The Senate would put together a budget for the first time in three years—and the details of that budget are crucial.
To prevent the federal debt from growing further out of control and harming economic growth in the long term, Congress must balance the budget in 10 years and keep it balanced—without raising taxes further.
This 5-point checklist covers the do’s and don’ts of balancing the budget in 10 years:
1. Do not raise taxes. Despite the President’s repeated assertions that he favors a balanced approach to deficit reduction, the latest budget debate over the fiscal cliff concluded by allowing 13 new or higher taxes to take effect, while it produced a net increase in spending of $47 billion. The tax hikes are hurting the economy and American workers by dampening investment and job creation. Yet our debt challenge remains. Only significant reductions in spending will effectively curb debt and deficits.
2. Reform entitlement programs. Congress must make much-needed reforms to entitlement programs to provide an affordable safety net. Congress should first repeal Obamacare or at least stop the subsidies and Medicaid expansion that begin in 2014. Social Security and Medicare should become true safety net programs and focus assistance on seniors in need. The eligibility age for both programs should match and reflect increases in longevity. Social Security’s cost-of-living adjustment should be based on a more accurate measure of inflation.Continue reading on blog.heritage.org