In November 2023, the Aspen Economic Strategy Group (AESG) published its sixth annual policy volume, titled “Building a More Resilient US Economy”, at a critical moment in the nation’s fiscal trajectory. With the Congressional Budget Office (CBO) projecting a $1.7 trillion budget deficit for the year—nearly double the shortfall recorded in 2022—the AESG’s report seeks to offer bipartisan, evidence-based strategies to stabilize U.S. finances while preserving essential investments in national priorities.
Chaired by former Treasury Secretaries Henry M. Paulson Jr. and Timothy F. Geithner, the AESG brings together economists and policy leaders from across the political spectrum to tackle pressing fiscal challenges. This year’s policy volume offers eight detailed papers, each addressing a specific aspect of the federal budget and long-term economic resilience.
Mounting Fiscal Pressures
The report arrives as concerns grow over the sustainability of U.S. fiscal policy. The record-high deficit stems from a combination of persistent spending—particularly on health care and entitlement programs—and lower-than-expected revenues, compounded by interest rate increases that have made government debt servicing more costly.
Paulson and Geithner, in a joint statement accompanying the report, warned that the U.S. is “approaching a fiscal tipping point”, urging lawmakers to take proactive steps to prevent a crisis of confidence in the government’s ability to manage its finances.
Key Policy Recommendations
The AESG volume addresses a wide range of fiscal and economic issues, focusing on both revenue enhancements and spending efficiencies. Notable proposals include:
- Tax Policy Reform: Recommendations include reducing inefficient tax expenditures and considering modest rate increases for high-income households to shore up revenue without stifling economic growth.
- Social Security Sustainability: Suggestions involve gradually raising the retirement age and adjusting cost-of-living formulas to ensure the long-term viability of the trust fund.
- Prescription Drug Pricing: Proposals call for allowing Medicare to negotiate prices for a broader range of drugs, a step analysts believe could yield billions in savings.
- Education and Workforce Investments: The volume emphasizes investing in early childhood education and policies to address pandemic-related learning loss, arguing that the long-term economic benefits justify the upfront costs.
- Global Economic Adaptation: With growing geopolitical uncertainty, the report highlights the need to enhance supply chain resilience and adapt to shifts in the global economy, particularly the slowdown in China’s growth.
Navigating Partisan Gridlock
One of the AESG’s core messages is the need for bipartisan compromise. Given the polarization in Congress and the looming 2024 presidential election, many experts worry that meaningful fiscal reform may be politically untenable. However, the group insists that continued inaction poses a far greater risk to the nation’s economic stability.
“Making hard choices now allows us to avoid more painful ones later,” said Geithner during a panel discussion following the report’s release. “If we fail to act, interest payments on the debt will begin to crowd out investments in everything from defense to health research.”
The Bigger Picture: Fiscal Health and National Resilience
Beyond budget numbers, the AESG frames fiscal responsibility as a national security and economic competitiveness issue. Without prudent budgeting, the U.S. risks losing the flexibility to respond to future crises—be it pandemics, economic shocks, or military threats.
The policy volume urges policymakers to view fiscal discipline not as austerity, but as a foundation for sustained investment in the public good. It highlights that smart, well-targeted reforms can reduce deficits while strengthening programs that support the economy’s most vulnerable populations.
A Call to Action
As the deficit trajectory continues to raise red flags among economists, investors, and international observers, the AESG’s latest publication serves as both a blueprint and a warning. Whether Congress acts on these recommendations remains to be seen, but the urgency of the group’s message is unmistakable: America’s economic resilience depends on its ability to make tough fiscal decisions today.
