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Good Start, but Much Work Needs to Be Done

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FOR IMMEDIATE RELEASE

WASHINGTON, DC -- Today, the House and Senate will vote on a compromise bill that represents a deal on increasing the debt limit between $2.1 and $2.4 trillion in exchange for at least $2.1 trillion in deficit reduction. Fiscal Commission and Moment of Truth project co-chairs Erskine Bowles and Senator Alan Simpson released the following statement:

"We are pleased and relieved that there is finally an agreement to raise our debt limit. Allowing the nation to default or to force the Treasury to prioritize payments would have been disastrous for our economy, and would have only exacerbated our debt and deficit problem by causing interest rates to spike and growth to slow. We applaud Congress and the President for bringing us back from the ledge. We are also thankful that Congress has finally begun the process of restoring fiscal sanity in paving a road by which we can achieve at least $2.1 trillion in deficit reduction.

However, we have not reached the promised land.

Congress has taken a positive first step by enacting a strong down payment on deficit reduction and putting in place a process to achieve additional savings, but the plan doesn’t do enough to stabilize our debt, nor does it make any meaningful structural reforms to address our nation’s long-term fiscal problems.

To be successful in restoring confidence among investors and voters, the special joint committee's recommendations must be sufficiently large to stabilize and then reduce the debt as a share of the economy within the next few years while enacting changes that would restore our long-term fiscal health.  In order to produce a plan that is big and bold enough to address the problem the committee will have to go above and beyond the minimum goals prescribed for it by tackling all parts of the budget. The committee should produce recommendations that make social security permanently solvent, slow the growth of health care spending, and enact pro-growth tax reform which would clean up the code and make the system more efficient while also reducing the deficit.

The positive response to the report of the Fiscal Commission and the strong bipartisan support for the work of Gang of Six by Senators in both parties have shown there is significant support for a large, comprehensive plan that puts everything on the table and tackles the largest drivers of future debt. The special committee should look to these plans as the model for what it should recommend in December."

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The Moment of Truth project is a non-profit, non-partisan effort which seeks to foster honest discussion about the nation's fiscal challenges, the difficult choices that must be made to solve them, and the potential for bipartisan compromise that can move the debate forward and set our country on a sustainable path. The Moment of Truth project is a project of the Committee for a Responsible Federal Budget.

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Aug 1, 2011
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Bowles and Simpson react to the deal Congressional leaders have struck to increase the debt limit and enact deficit reduction.