Addressing the Long-Run Budget Deficit: A Comparison of Approaches [November 30, 2012] [open pdf - 437KB]
"The growth of the national debt, which is considered unsustainable under current policies, continues to be one of the central issues of domestic federal policy making. On August 2, 2011, Congress adopted, and the President signed, the Budget Control Act (P.L. [Public Law] 112-25), which might be viewed as an initial step in addressing long-run debt issues. A number of tax cuts also expire during the 112th Congress. While it has been recognized for some time that the growing long-term debt is an issue, this concern was reinforced with the downgrading of U.S. Treasury securities by Standard and Poor's from AAA to AA [plus] on August 5, 2011. More recently, however, short-term concerns about the effect of spending cuts and tax increases on economic recovery have become a central issue for the immediate future. This report examines alternative approaches to reducing the deficit, relating to the immediate issues arising from the Budget Control Act and the expiring tax cuts as well as to ongoing longer-term decisions about how to bring the debt under control. It focuses on the trade-offs between limiting the provision of defense and domestic public goods, reducing transfers to persons including entitlements for the elderly and those with low income, reducing support for state and local governments, and raising taxes. Using projections of the debt and deficit, it also addresses how limiting reliance on one source of deficit reduction creates pressure on other sources."
CRS Report for Congress, R41970