The third element is what the CRFB called a “default deficit reduction mechanism”—an automatic set of fiscal guardrails that would kick in once the economy recovers. The mechanism would freeze the automatic growth of spending programs, including Social Security, Medicare, and Medicaid, hold discretionary spending flat, and phase in a graduated surtax on high earners and corporations. Under the group’s estimates, such a mechanism could cut deficits to 3% of GDP within four years, saving $3.5 trillion over five years and $10.25 trillion over a decade.
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