By Mattea Kramer, Senior Research Analyst, National Priorities Project
The fiscal cliff is an opportunity for lawmakers to do the serious budget planning that they’ve avoided in recent years. In a perfect world, they would cancel the automatic cuts of sequestration and instead negotiate a long-term budget deal that addresses three key areas of the budget: health care costs, military spending and tax revenue. We could reduce health care costs without cutting benefits by phasing out our fee-for-service system and paying for performance instead. We could save many billions of dollars annually by spending more wisely on the Pentagon. And currently federal tax revenue as a share of the economy is at its lowest point in more than half a century. That fact ought to be a wake-up call: We’re not bringing in enough revenue to fund key priorities. It would be wise to limit credits and deductions and allow parts of the Bush-era tax cuts to expire.
And as they put together a long-term budget deal, it’s crucial that lawmakers not lose sight of the millions of unemployed Americans. Federal emergency unemployment benefits expire at the end of the year; those benefits should be extended so that the most vulnerable Americans aren’t hit with yet another devastating setback. With the economy still so fragile, deficit reduction is a long-term objective, while supporting our economic recovery is an urgent matter.