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Budget Proposal to Increase Federal Spending

Summary:
Senate Majority Leader Mitch McConnell and Minority Leader Charles Schumer released a bipartisan budget proposal this week. Why it matters: Congress currently faces a Thursday night deadline to avoid another government shutdown. The proposal would also add hundreds of billions of dollars in new federal spending over two years. Senior Research Fellow Veronique de Rugy wrote earlier this week on the need for cuts in federal spending to ensure our future economic growth and fiscal health, and on the looming threat of trillion deficits. There is a consensus in the academic literature on debt reduction that focusing primarily on spending cuts instead of tax increases is key to long-term success Governments that have successfully reduced their debt-to-GDP ratio also tend to focus on reforming

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Senate Majority Leader Mitch McConnell and Minority Leader Charles Schumer released a bipartisan budget proposal this week.

Why it matters: Congress currently faces a Thursday night deadline to avoid another government shutdown. The proposal would also add hundreds of billions of dollars in new federal spending over two years.

Senior Research Fellow Veronique de Rugy wrote earlier this week on the need for cuts in federal spending to ensure our future economic growth and fiscal health, and on the looming threat of $1 trillion deficits.

  • There is a consensus in the academic literature on debt reduction that focusing primarily on spending cuts instead of tax increases is key to long-term success
  • Governments that have successfully reduced their debt-to-GDP ratio also tend to focus on reforming social programs like Medicare and Social Security
  • Congressional Budget Office data show that more than 80 percent of spending growth comes from Social Security, healthcare, and interest payments on the debt.
Veronique De Rugy
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist. Her primary research interests include the U.S. economy, the federal budget, homeland security, taxation, tax competition, and financial privacy. Her popular weekly charts, published by the Mercatus Center, address economic issues ranging from lessons on creating sustainable economic growth to the implications of government tax and fiscal policies. She has testified numerous times in front of Congress on the effects of fiscal stimulus, debt and deficits, and regulation on the economy.

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