News HeadlinesThe tax and spending blueprint proposed by Senate Budget Committee Chairman Kent Conrad calls for reducing the federal deficit to 3 percent of the overall economy in 2015 from 9.8 percent this year...
Conrad's plan would freeze all non-security discretionary spending for three years and provides for tax relief of $780 billion over five years.
IMO, although this plan is somewhat more aggressive than the White House Plan, as it proposes to reduce the U.S. budget deficit to 3% of GDP by 2015 vs. the White House's goal of 3.9% of GDP, it falls short of a credible fiscal consolidation effort. It relies largely on a temporary non-defense discretionary spending freeze. It fails to address Medicare, Medicaid, and Social Security. As a result, what fiscal gains it would make would amount to little more than the fleeting battlefield gains made by Germany ala the Battle of Bulge toward the close of WW II. As entitlement spending remains on an unsustainable trajectory, and the health care system's fundamental excess cost problem has not been addressed, increases in entitlement spending would wipe out the possible modest progress achieved from temporarily freezing non-defense discretionary spending.