Here’s the United States’ fiscal predicament in a nutshell: Under current law, the publicly held debt of the federal government will increase by 4.5 percent of gross domestic product over the next decade, to a historically anomalous 78.7 percent of
Here’s the United States’ fiscal predicament in a nutshell: Under current law, the publicly held debt of the federal government will increase by 4.5 percent of gross domestic product over the next decade, to a historically anomalous 78.7 percent of GDP. Thereafter, the debt will grow steadily, exceeding 100 percent of GDP in 2039, due chiefly to medical and retirement programs for an aging population, plus interest payments. The Congressional Budget Office, which produced these forecasts, says this scenario would have “significant negative consequences for both the economy and the federal budget.” It’s a future in which entitlements and interest gradually squeeze out core functions of the national government such as defense, law enforcement, national parks and basic research.
In the face of these challenges, the majority-Republican House has produced a budget blueprint that serves no particular purpose except to demonstrate the inadequacy of pure, no-tax-increases GOP policy doctrine. To be sure, the document calls for an essentially balanced budget by 2025, which would reduce debt held by the public to 55 percent of GDP. It achieves this, however, entirely by cutting scheduled spending by $5.5 trillion, the largest chunk of which would be a $2 trillion 10-year savings from repealing the Affordable Care Act — which is neither sensible nor politically feasible.
Another $900 billion would come from converting Medicaid to a block grant program administered by the states, which also isn’t going to happen under a Democratic president, if ever. Meanwhile, the House GOP would reduce the discretionary budget by $372 billion over the next decade, which results from tightening all non-defense accounts by $759 billion beyond the existing unsustainable sequestration plan and shifting about half those savings to the defense budget.
Given the enormous cuts this would imply to the courts, parks, FBI, water projects and a host of other useful and — even in red states — popular programs, the GOP approach wouldn’t be desirable even if it were politically possible. In fact, Republicans themselves are deeply divided over how to prevent further cuts to defense spending under the sequester law, to the point where the budget plan’s GOP authors resorted to a gimmick — tucking in $36 billion of “emergency” defense spending for fiscal 2016, over and above President Barack Obama’s $58 billion request, to evade the impact of the sequester.
We give the GOP credit for floating controversial structural reforms to costly medical programs (though its premium-support plan for Medicare would only take effect a decade from now). Kudos to them as well for aiming at far more deficit reduction than is called for in Obama’s budget, which avoided entitlement reform almost as assiduously as the Republicans ducked the need for more revenue. The fatal flaw in their plan, however, is its assumption that the U.S. government already collects the optimum amount of taxes given its foreseeable responsibilities.
That is not only a financial and political mistake but also a moral one, given that the only alternative is to balance the budget through sacrifices in the domestic budget, including programs for those who need help the most.
