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To support sound budget policies, the level of federal revenue — measured as a percent of the nation’s economy, or gross domestic product (GDP) — needs to increase over previous and currently projected levels.
Our nation’s budget policies reflect our approach to two fundamental questions: what and whom will our country invest in and support, and how will we pay for those investments?
Our current approach is one of low investment and support for people and communities relative to other wealthy nations, coupled with even lower revenue. This has led not only to a fiscal deficit, with federal debt growing more quickly than GDP, but also an investment deficit.
To meet our commitments to seniors, make high-value investments that will improve well-being and broaden prosperity, and improve our fiscal outlook, we must raise more revenue. Simply put, we cannot meet 21st-century needs with past levels of revenue.
As a first step, policymakers should use the scheduled expiration of most provisions of the 2017 tax law in 2025 as an opportunity to bolster the revenue base, not erode it by failing to pay for any tax cuts that are extended and potentially adding still more tax cuts for corporations and high-income households on top.
Specifically, higher revenue is needed to address three challenges:
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Meeting long-standing retirement and health care commitments to seniors.
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Making high-value investments that improve well-being and broaden opportunity.
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Managing the future risks associated with higher debt.
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