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Congress should take a more nuanced approach to budget cutting that addresses the budget deficit while simultaneously reducing the investment and trade deficits.

Instead of focusing solely on the budget deficit, Congress should take a more nuanced approach to budget cutting that addresses the budget deficit while simultaneously reducing the investment and trade deficits. The only way to do this is to increase targeted investments that spur innovation, productivity, and competitiveness while cutting budgets elsewhere. Increasing these productive public investments will close the investment deficit, boost U.S. competitiveness and exports, and generate higher economic growth, which is the single best way to close the budget deficit. The CBO estimates that an increase of just 0.1 percent in the GDP growth rate could reduce the budget deficit by as much as $310 billion cumulatively over the next decade. For example, an increase in the real rate of GDP growth from the CBO projection of 2.8 percent over the next decade to 4 percent—the U.S. growth rate from 1993 to 2000—would, all else equal, cut the cumulative budget deficit in half, or by $6.8 trillion, over the next decade.