These days Republicans and Democrats can’t seem to agree on, well, anything. But suddenly, a bi-partisan consensus is building in support of new laws that would put deficits on a sustained path to a specific goal: lowering the gulf between revenues and outlays by roughly half, to 3% of GDP. The groundswell started in earnest on January 9, when a members of the Bipartisan Fiscal Forum, a group from the House that looks for ways to address the rising fiscal challenges, introduced a resolution that would impose what I’ll call “The 3% Solution.” The proposal is more aspirational than specific: It doesn’t establish line-by-line objectives for achieving its target, for example. Still, that so many Representatives from both sides of the recognize the urgency, triggered now by a picture that deteriorating far more rapidly than almost anyone predicted just a year ago, marks an extraordinary shift in the national debate.
Even prior to the the House resolution, influential think tanks were championing the 3% target, notably the Commission for a Responsible Federal Budget. But in the past few weeks, the momentum been gaining speed. In February, hedge fund titan Ray Dalio posted on X avowing that he “loves and endorses” the idea, adding that “while the most responsible members of both parties don’t agree on much, they agree on this.” The editorial boards of the Washington Post and Bloomberg ran opinion pieces backing the goal. All the high-profile endorsements triggered a rash of stories that reprised calls from past politicians and economists for deficit caps, including Warren Buffett’s view that 3% is indeed the right number.
