White House focuses on boosting workforce as key part of
effort to address budget strains posed by retiring baby boomers. The White
House has a new tack for dealing with rising deficits: try to boost the
workforce and its productivity in the hopes of muddling through the surge of
retirees that will strain the social safety net for the next 20 years. Rather than seek to balance the budget and sharply reduce
the debt, President Barack Obama ’s
economic advisers now say the focus should be to stabilize it until most of the
baby boomers, or those born roughly between 1946 and 1964, retire.
argument, amplified in Mr. Obama’s annual economic report to Congress on
Thursday, is aimed at blunting criticism that the White House has recoiled from
the kind of unpopular entitlement curbs both parties have said will be needed
to cut deficits as a wave of retiring workers demands more federal spending while
shrinking the tax rolls. Over the past month, the White House has unveiled a series
of programs designed to shore up workforce participation, which has steadily
dropped over the past decade. Several proposals reflect ideas percolating in
both parties, such as an expansion of the 40-year-old Earned Income Tax Credit
to childless workers and tripling a tax credit that covers child care.
Republicans have advanced similar tax-relief incentives in
the past to lift stagnant labor-force participation. But they say it is
disingenuous for the White House to suggest productivity-boosting measures in
President Obama’s budget can substitute for comprehensive overhauls of
entitlement programs such as Social Security.
Other White House agenda items—such as an overhaul of the
corporate tax system and the immigration system, a transportation spending bill
and new foreign trade deals—aren’t new. But advisers are touting them as major
output boosters. The White House forecasts that its budget will reduce the
publicly held national debt to around 73% of gross domestic product over the
next 10 years, from 75% today. Under current law, it forecasts the debt would
rise to 81% of GDP.
Administration officials have largely conceded that the type
of “grand bargain” that achieves more than $2 trillion in lower deficits with
an array of spending cuts and revenue increases, which officials pursued four
years ago, now looks out of reach.
Treasury Secretary Jacob Lew told lawmakers
this month that while the administration’s budget isn’t balanced over 10 years,
it achieves what’s known as “primary balance,” in which the deficit is rising
only to service past debt, and not because of new spending. “I’m not saying
that this is the end of the discussion on fiscal policy,” he added.
Despite evidence that individual workers’ wages have
flattened out since the 1970s, middle-class household incomes continued rising
in the 1980s and 1990s as more women entered the workforce. Household incomes
are now back to levels last seen in the late 1990s. The administration has
proposed a new $500 tax credit for married couples when both spouses work that
could help offset child care and commuting costs. It has also proposed tripling
the child-care tax credit, to as much as $3,000 per qualifying child.
White House officials reject criticism that they aren’t
doing enough to find savings in entitlement programs. They say their
health-care overhaul has helped to stem rising health costs, which are a major
driver of deficits. They have proposed $400 billion in savings from changes to
here to access the full article on The Wall Street Journal.