The smart money is realizing a major flaw in the budget sequester: It doesn't actually fix the debt problem.
So much focus has been on the potential economic damage caused by the $85 billion in automatic cuts slated to begin next week. The Pentagon warns about civilian employees swallowing a 20% pay cut and untrained soldiers. Airport security lines are supposed to get more tedious. Food safety inspections would stop. The list of terrifying cutbacks increasingly gets highlighted by the Obama administration.
But for all that supposed sacrifice, the $1.2 trillion of sequestration cuts over the next decade do little to improve the government's balance sheet.
"We project that debt held by the public will reach 76% of GDP this year, the largest percentage since 1950," Congressional Budget Office Director Douglas Elmendorf testified to Congress last week. "And, under current laws, we project that debt in 2023 will be 77% of GDP-far higher than the 39% average seen over the past 40 years-and will be on an upward path."
The $1.5 trillion in additional savings being requested by President Obama from spending cuts and more tax revenues would still leave that debt-to-GDP ratio at a historically high 70%.
Erskine Bowles and Alan Simpson weighed in on Tuesday with a call for more in deficit reduction. And on Wednesday, the nonpartisan Committee for Economic Development also advised doing more to tackle the debt in an open letter to Obama and Congress.
"The most important point to recognize here is that the sequester is unlikely to achieve sustainable progress to reducing our debt," said Roger Ferguson, Jr., co-chairman of the CED, CEO of TIAA-CREF, and a member of Obama's disbanded Council on Jobs and Competitiveness.
The CED advised the government put that ratio on a "continuous downward path" that reaches a maximum of 60% in the next decade. Back of the envelope calculations based on CBO numbers suggest that would mean roughly $4 trillion in savings.
Despite the political gridlock, the CED advises an alternative to the sequester that is divided between spending cuts and revenue increases. It would then establish a two-year budget framework to reform entitlements and the tax code.
Editor's Note: This article by Josh Boak originally appeared on The Fiscal Times.
For more from The Fiscal Times:
Sequestration: What in the World Is It?
Sequester Could Wipe Out More Than a Million Jobs
Obama Pushes Short-Term Delay of Sequester Cuts
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