Balanced budget in 10 years: “Mission Impossible”?

posted at 12:01 pm on January 24, 2013 by Ed Morrissey

That’s the plan announced by John Boehner this week, as House Republicans broke huddle and the RNC went into another.  The previous House budget plans balanced the federal budget on a much longer time frame, at some point in the third decade out, and it triggered grumbling from the fiscal conservatives in the Tea Party movement, who want an end to escalating debt and looming disasters in unfunded entitlement liabilities.  It’s a tall order, and so far more aspirational than concrete:

House Speaker John Boehner’s promise on Wednesday to balance the federal budget ”over the next 10 years” was aimed at convincing Tea Party conservatives in Congress to hold their fire over a bill to temporarily raise the U.S. debt ceiling.

But carrying it out would require spending cuts or revenue increases far greater than anything seriously considered by Congress in recent years, including the budget passed by the Republican-controlled House last March, which envisioned shrinking deficits to $3.13 trillion over 10 years in part by a total revamp of Medicare and Medicaid, the government health insurance programs for seniors and the poor.

That budget resolution, drawn up by House Budget Committee Chairman Paul Ryan, projected abalanced budget not in 10 years, but by 2040.

“It seems politically unrealistic to think you could get to a balanced budget” in a decade, said Robert Bixby, executive director of the Concord Coalition, a non-partisan organization devoted to deficit reduction.

My colleagues at The Fiscal Times, Josh Boak and Eric Pianin, scoff at the idea of balancing a budget in that time frame, especially with Republicans refusing to raise taxes again.  They call it “Mission Impossible”:

But delivering on the next part of the agreement – a balanced budget after 2023 – looks tricky. For starters, Republicans ruled out additional tax increases after the fiscal cliff deal at the start of the year with Obama. Having accepted a tax hike on families with incomes above $450,000, they’re determined to achieve any further deficit reduction solely by slashing expenditures.

There will always be plenty of gristle to trim from a multi-trillion-dollar budget, but because much of the discretionary spending is tapped out, the amount of cuts required over 10 years would chop into the very marrow of Medicare, Medicaid and the military.

Actually, military spending is discretionary spending, allocated by Congress on an annual basis through the budget.  Medicare, Medicaid, and Social Security (along with interest service on the debt) are statutory (commonly called mandatory) spending — automatically allocated by law rather than by budget.  As I point out in my own column today at TFT, that’s precisely the spending that drives the deficit, and the spending that drives those large, unfunded future mandates. As I wrote earlier this week, the St. Louis Fed came to the same conclusion, noting that the debt crisis began in 1970 when those expenditures started outstripping revenue, and now drive the deficits.

That prompted an e-mail from a friend of mine in Mississippi, Pamela Stennis.  Pamela’s uncle was Blue Dog Democrat John Stennis, who served more than 40 years in the Senate and is considered the father of the modern US Navy.  She recently came across a column her uncle wrote in 1984 for a local newspaper urging the country to address the fiscal crisis that had become apparent to him — and to other Democrats at the time:

“With the national debt approaching $1.5 trillion and with no apparent relief in sight,” Stennis wrote at the time, “we must make a concentrated effort to find the best way out of this devastating deficit dilemma.”  How bad was the “devastating deficit dilemma” in 1984? “We simply cannot go on with annual deficits in the $200 billion range without subjecting our nation’s future to continued inflation and a financial burden which is simply too heavy to bear.”

Let’s put that in context. A $200 billion deficit in 1984 was certainly significant, but what would that mean in 2012 dollars?  Calculating for an average annual inflation rate of 2.9 percent, that figure would be a deficit of $456 billion today.  That’s not even half of the deficits run every year under Barack Obama.  Similarly, the level of national debt of $1.5 trillion in 1984 would translate to $3.34 trillion in 2012 – about one-fifth of today’s national debt level of over $16 trillion.

What did Senator Stennis suggest to resolve the deficit crisis in 1984?  That will sound more than vaguely familiar, too.  “I have called for the formation of a bipartisan Commission on the Deficit to develop a plan for achieving a balanced federal budget by 1990,” Stennis announced in his October 1984 column, “composed of Members of Congress and outside economic experts.”  The panel, Stennis promised, would study “the deficit problem to determine causes and solutions,” and would also provide “a budget plan for fiscal years 1985 through 1990,” delivering balance in the final year.

“I think the Senator would have been beside himself at how out of hand this situation has gotten,” Pamela wrote me when she sent me the scan of the old clipped article. “The fact that over 20 years after he addressed the issue, the debt was now 17 times what it was would have him probably concluding that Congress had failed miserably in its duty to the people.”

We have done the “commission” route a couple of times, and we know what the problems are.  We just lack the will to address them.  Joe Scarborough writes today about Senator Tom Coburn’s argument that a higher power will drive us toward solutions, whether we like them or not:

“It doesn’t matter what mode the president is in.  It doesn’t matter what mode the Republican Party is in. There’s a power greater than both of them. It’s called math, and the math is going to consume us.”

So said Oklahoma senator Tom Coburn on Morning Joe this week while discussing the president’s inaugural address. As the president and his opponents prepare to scrap over social issues in circular debates that will produce far more heat than light, the possibility of an economic meltdown in America grows exponentially in these uncertain days because of the president’s aversion to arithmetic. …

Mr. Obama should call Tom Coburn to the White House today to begin planning how to pay down the debt, balance the budget and save Medicare. He should but he won’t. Instead, Barack Obama will keep playing to his base, blaming his opponents and doing everything in his power to avoid making the tough decisions required to fix this problem.

That’s what my conclusion addresses, and adds another higher power — time:

We have seen what happens when Washington kicks the can down the road, which our political class has been doing for three decades or more. Why? They don’t want to have to take responsibility for taking the necessary and ever-more-painful steps to rein in spending on entitlements and individual payments, which are the prime drivers of out-of-control federal spending.  This is why we have to worry about tomorrow’s budget today.  Otherwise, in twenty years we’ll pull these same predictions and ask – as we do today – why no one paid attention while the problems could still be solved without massive economic damage.

If we don’t act, these programs will collapse out of the utter irrationality of their math and the implacable rationality of time.  If we want to save these safety-net programs, we need to act to put them on a realistic fiscal footing — and the time to do that is quickly running out.


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It’s all so darned obvious. Of course I’ve been thinking that about a lot of things for the past four years.

Drained Brain on January 24, 2013 at 12:06 PM

This whole “10 years” balance budget talking point is a scam. They are just using it to divert and distract from the reality that the (R)s along with Obama have once again kicked the can down the road.

MoreLiberty on January 24, 2013 at 12:07 PM

“Ten years, that’s enough time for me to cement my retirement portfolio.”

-average worthless politician

Bishop on January 24, 2013 at 12:07 PM

5 congressional elections happen in 10 years. There is no way to have any plan that will be implement within a 10 year time frame.

Anybody peddling a “plan” that can’t be done within 2 years is a liar.

portlandon on January 24, 2013 at 12:08 PM

I seem to remember the Republican Study Committee’s version of the FY2013 budget reaching “balance” (total cash edition) by the end of 2022. It shouldn’t be too hard to fashion a budget that does so.

Of course, getting the Senate Rats to adopt it is another matter entirely.

Steve Eggleston on January 24, 2013 at 12:09 PM

My colleagues at The Fiscal Times, Josh Boak and Eric Pianin, scoff at the idea of balancing a budget in that time frame, especially with Republicans refusing to raise taxes again.

They just don’t get it.

Raising tax rates does not translate to higher revenues for the tax man. In fact, history shows the opposite to be true.

UltimateBob on January 24, 2013 at 12:09 PM

These programs need to collapse. They are unconstitutional and unsupportable. Coburn is right – the math says it won’t work. Am I cold and heartless? Maybe. But I think it’s even more cold and heartless to screw our posterity so we can enjoy a couple of decades in our Winnebagos at their expense.

End Social Security and Medicare and Medicaid NOW!

GWB on January 24, 2013 at 12:10 PM

Medicare, Medicaid, and Social Security (along with interest service on the debt) are statutory (commonly called mandatory) spending

Semantics. SCOTUS ruled in 1960 that you have no property rights in Social Security and congress and stop payments if they like. Any doubt that they would rule differently on Medicare and Medicade? That makes them discretionary like all other spending. The difference is they (congress critters) don’t want to tinker with it because they have been prevaricating since 1960 about it.

chemman on January 24, 2013 at 12:11 PM

All these ten year plans and future reductions… you’d think our budget would be negative at this point.

Ukiah on January 24, 2013 at 12:11 PM

It’s a tall order, and so far more aspirational than concrete:

That’s my boy!

We have done the “commission” route a couple of times, and we know what the problems are. We just lack the will to address them.

Um…no…RINO leadership and GOPe bloggers Lack said “will”…you know….the guys who keep telling us the “NEXT” fight is the one that matters.

We have seen what happens when Washington kicks the can down the road, which our political class has been doing for three decades or more. Why?

LMAO…says the Lead “Can Kicker”.

If we don’t act, these programs will collapse out of the utter irrationality of their math and the implacable rationality of time.

You are Hilarious, cupcake!

Tim_CA on January 24, 2013 at 12:12 PM

Instead, Barack Obama will keep playing to his base, blaming his opponents and doing everything in his power to avoid making the tough decisions required to fix this problem.

Barry excels at what I can only call “verbal masturbation”. Everyone feels good afterwards, but it accomplishes nothing.

GarandFan on January 24, 2013 at 12:13 PM

“It doesn’t matter what mode the president is in. It doesn’t matter what mode the Republican Party is in. There’s a power greater than both of them. It’s called math, and the math is going to consume us.”

But math is hard!!!!!

UltimateBob on January 24, 2013 at 12:13 PM

We don’t have 10 years to balance the budget.

We have less than that to deal significantly WITH THE DEBT.

This means we need to not only balance, but be in SURPLUS.

wildcat72 on January 24, 2013 at 12:15 PM

End Social Security and Medicare and Medicaid NOW!

GWB on January 24, 2013 at 12:10 PM

Do I get my money back that I paid in over the last 30+ years?

VegasRick on January 24, 2013 at 12:15 PM

Do I get my money back that I paid in over the last 30+ years?

VegasRick on January 24, 2013 at 12:15 PM

I’ve NEVER assumed that these ponzi schemes would be in place for my use.

Take Precautions!

Tim_CA on January 24, 2013 at 12:17 PM

End Social Security and Medicare and Medicaid NOW!

GWB on January 24, 2013 at 12:10 PM

Do I get my money back that I paid in over the last 30+ years?

VegasRick on January 24, 2013 at 12:15 PM

Unfortunately, no. That money was gone as soon as your employer sent it to the feds.

Steve Eggleston on January 24, 2013 at 12:19 PM

End Social Security and Medicare and Medicaid NOW!

GWB on January 24, 2013 at 12:10 PM

Do I get my money back that I paid in over the last 30+ years?

VegasRick on January 24, 2013 at 12:15 PM

Nope. That’s what happens in Ponzi Schemes.

portlandon on January 24, 2013 at 12:22 PM

I’m sure they’ll be happy to send you some worthless IOUs they have been putting in that ‘lock box’ (sarc).

CoffeeLover on January 24, 2013 at 12:24 PM

I could balance the federal budget today and cut taxes at the same time.

bgibbs1000 on January 24, 2013 at 12:26 PM

Anyone with just basic math skills could balance the budget in one year.

booger71 on January 24, 2013 at 12:27 PM

As for the “mission impossible” statement, as long as both halves of the bipartisan Party-In-Government are not only committed to holding the half of the populace hooked on government harmless, but committed to growing that percentage, it is impossible to balance the budget.

Steve Eggleston on January 24, 2013 at 12:30 PM

If you really want to balance the budget, get rid of “the doc fix,” the annual bump in pay doctors get to treat Medicare and Medicaid patients.
People have to pay for medical treatment, they use fewer services and less money is needed.
Of course we’ll be accused of pushing Grandma off a cliff.
But we will be balancing the budget.

LincolntheHun on January 24, 2013 at 12:50 PM

They just don’t get it.

Raising tax rates does not translate to higher revenues for the tax man. In fact, history shows the opposite to be true.

UltimateBob on January 24, 2013 at 12:09 PM

Then why did the economy improve after Reagan raised taxes on the wealthy and corporations?

And why did the economy improve when Clinton raised taxes on the wealthy and corporations?

According to the Republican Senate report, The U.S. government ran a budget surplus of $69 billion or 0.8 percent of gross domestic product (GDP) in fiscal year 1998, $125 billion or 1.4 percent of GDP in fiscal year 1999, and $236 billion or 2.4 percent of GDP in fiscal year 2000. http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=0b30811a-152e-44a9-8006-2727dcbe2759

The Congressional Budget Office said we could raise $114 billion over ten years — twice as much as raising the Medicare age — by limiting corporate tax deferrals. https://www.cbo.gov/sites/default/files/cbofiles/attachments/01-2013-MultinationalTaxes_OneCol.pdf

U.S. Corporate Tax Rate Plunges To 40 Year Low Of 12 Percent http://online.wsj.com/article/SB10001424052970204662204577199492233215330.html

U.S. Has Lowest Corporate Tax Rate In The Developed World For Over A Decade!
http://www.ctj.org/pdf/oecd201106.pdf

Corporate Profits At All-Time High http://articles.marketwatch.com/2011-07-29/commentary/30699039_1_profits-gdp-wages-and-salaries

JustTheFacts on January 24, 2013 at 12:53 PM

If you really want to balance the budget, get rid of “the doc fix,” the annual bump in pay doctors get to treat Medicare and Medicaid patients.
People have to pay for medical treatment, they use fewer services and less money is needed.
Of course we’ll be accused of pushing Grandma off a cliff.
But we will be balancing the budget.

LincolntheHun on January 24, 2013 at 12:50 PM

I have two bits of bad news on that:

- The “doc fix” is now permanent.
- Medicare’s Hopsital Insurance “trust fund” was going to be bankrupt in about a decade even if the cuts had remained as they were as of the drop of the big ball in Times Square.

Steve Eggleston on January 24, 2013 at 12:58 PM

I have the perfect solution!

1) Get rid of the Defense Department.

2) Remove restrictions on owning of any firearms.

3) Sell off Defense assets that are now legal to own.

Gun owners can have an A-10 or an A1 Abrams if they want, schools not bombs, everyone is happy!

- Brought to you by Reductio ad Absurdum.

Snowblind on January 24, 2013 at 1:00 PM

I have come to the conclusion that Obama and his ilk did not fundmentally transform America… it was already transformed and they just took advantage of it.

To that end, I think it is presumptuous for any one of us to think that either balancing the budget or drastically reducing our current debt would just take some nebulous concept of ‘political will’.

With peaks and valleys along the way, it has taken us about 100 years to get here. (I go back to T. Roosevelt and Wilson and the first Progressive era, because they began to lay the philosophical groundwork for what followed).

Fixing the mess is not an overnight process.

10 years to a balanced budget is ambitous. Anything less would be naive.

I say, we hear what they’ve got. If they can present a plan that will reasonably get us to a balanced budget in 10 years, that would be better than just about anything else out there.

RightWay79 on January 24, 2013 at 1:09 PM

Sorry for the couple typos up there.

RightWay79 on January 24, 2013 at 1:10 PM

The Congressional Budget Office said we could raise $114 billion over ten years — twice as much as raising the Medicare age — by limiting corporate tax deferrals. https://www.cbo.gov/sites/default/files/cbofiles/attachments/01-2013-MultinationalTaxes_OneCol.pdf

Of course you are being disingenuous. Did you even read the document?

At the national level, the top corporate tax rate in the United States (the statutory tax rate on income in the
highest bracket) is 35 percent. When combined with state and local corporate taxes, that rate rises to 39 percent—higher than that in any of the other 34 member countries of the Organisation for Economic Co-operation and Development (OECD).

I’, not sure you even understand what you read.

The Congressional Budget Office said we could raise $114 billion over ten years — twice as much as raising the Medicare age — by limiting corporate tax deferrals.

These tax deferrals are for income earned overseas. The United States is one of the few countries that taxes individuals and corporations for what they earn overseas.

MoreLiberty on January 24, 2013 at 1:19 PM

you CANNOT balance the budget when you run deficits every year, even the dumbest obama voter should be able to figure that out

burserker on January 24, 2013 at 1:56 PM

MoreLiberty on January 24, 2013 at 1:19 PM

The Tax Rate for corporations is supposed to be 35% but after billions in corporate subsidies they pay only 12% tax rate.

The CBO report said:

On balance, curtailing or eliminating corporations’ ability to defer U.S. taxes until such income is repatriated would boost both efficiency and tax revenues; such a change would boost U.S. tax revenues by more than $100 billion over a 10-year period, according to an estimate by the staff of the Joint Committee on Taxation; that would amount to the largest revenue increase attributable to the options discussed in this report.

https://www.cbo.gov/publication/43764

President Reagan said:

“We’re going to close the tax loopholes that have allowed the truly wealthy to avoid paying their fair share… What we’re trying to move against is institutionalized unfairness. We want to see that everyone pays their fair share, and no one gets a free ride. Our reasons? It’s good for society when we all know that no one is manipulating the system to their advantage because they’re rich and powerful.”

Reagan raised taxes on the wealthy and corporations! As a mater of fact he raised taxes 11 times.

So what would President Reagan say today?

U.S. Corporate Tax Rate Plunges To 40 Year Low Of 12 Percent http://online.wsj.com/article/SB10001424052970204662204577199492233215330.html

U.S. Has Lowest Corporate Tax Rate In The Developed World For Over A Decade!
http://www.ctj.org/pdf/oecd201106.pdf

JustTheFacts on January 24, 2013 at 1:58 PM

My colleagues at The Fiscal Times, Josh Boak and Eric Pianin, scoff at the idea of balancing a budget in that time frame, especially with Republicans refusing to raise taxes again. They call it “Mission Impossible”:

But delivering on the next part of the agreement – a balanced budget after 2023 – looks tricky. For starters, Republicans ruled out additional tax increases after the fiscal cliff deal at the start of the year with Obama. Having accepted a tax hike on families with incomes above $450,000, they’re determined to achieve any further deficit reduction solely by slashing expenditures.

There will always be plenty of gristle to trim from a multi-trillion-dollar budget, but because much of the discretionary spending is tapped out, the amount of cuts required over 10 years would chop into the very marrow of Medicare, Medicaid and the military.

Ed, your “colleagues at The Fiscal Times” don’t seem too bright. What part of cutting taxes leads to revenue-growth (granted, in a growing economy, which cutting taxes and regulations can achieve) don’t they understand?

Bitter Clinger on January 24, 2013 at 2:00 PM

My mother is in an upscale Retirement Community and when I visit her, she and her friends sound like the worst looters you can imagine. They want/expect/demand the MOST advanced medical care you can imagine to be damned well paid for because of promises made by politicians. THE most advanced hip operations, THE most advanced cardiac and nutritional care, THE most advanced medications (thank you Bush) paid for by the Earners because that was what was Supposedly promised.

When you point out that SS/Medicaid was supposed to be a “supplemental” retirement program you get hate looks. That grandparents should live with their families and spend their own money on insurance or medicine is deemed “Evil talk”. To mention that perhaps they were lied to is dismissed as irrelevant. It reminds me of the movie “Brazil”.

Bulletchaser on January 24, 2013 at 2:08 PM

Ed, you modified Stennis for inflation; you should also modify for population growth, another factor of two. It is still awful.

burt on January 24, 2013 at 2:09 PM

The Congressional Budget Office said we could raise $114 billion over ten years — twice as much as raising the Medicare age — by limiting corporate tax deferrals.

$114 billion over 10 years, eh? Bet you think that’s a big number. You know how much the government is expected to spend in the next 10 years? 46 trillion dollars. $114 billion is less than 1/2 of 1% of that. In other words, a rounding error. The government will spend more than that on copy paper over 10 years.

Liberals love to do this. Throw out numbers in the hundreds of billions over 10 years, while never ever ever mentioning the multiple TRILLIONS that will still be spent if nothing id done about Medicare and Medicaid.

There. Isn’t. Enough. Money.

rockmom on January 24, 2013 at 3:12 PM

No funds for the Dept of Energy, Dept of Education, Planned Parenthood, NPR, and the EPA. Those people are out of work. So Sorry. LOL

No foreign aid to Egypt, Pakistan, or any other ME countries, either.

It might not balance the budget, but would cut some wasteful spending.

Mirimichi on January 24, 2013 at 3:13 PM

Guy Benson had it right when he proposed the Republicans embracing Simpson-Bowles in the fiscal cliff negotiations. It would have been infinitely better than the deal we ended up cutting and would have been a political victory by putting Obama in a box on spending.

eaglephin on January 24, 2013 at 3:47 PM

Liberals love to do this. Throw out numbers in the hundreds of billions over 10 years, while never ever ever mentioning the multiple TRILLIONS that will still be spent if nothing id done about Medicare and Medicaid.

There. Isn’t. Enough. Money.

rockmom on January 24, 2013 at 3:12 PM

The Congressional report finds that ending corporate tax dodging would cut the deficit by “TWICE” as much as hiking the Medicare age as proposed by Ryan etc.

Raising taxes on the wealthy and on corporations worked for Reagan and it worked for Clinton to balance the budget yet now we have 40&60yr record low tax rates for corporations and the wealthy but we would rather push Granny off the cliff for a much smaller reduction in the deficit.

According to the Republican Senate Report:

The U.S. government ran a budget surplus of $69 billion or 0.8 percent of gross domestic product (GDP) in fiscal year 1998, $125 billion or 1.4 percent of GDP in fiscal year 1999, and $236 billion or 2.4 percent of GDP in fiscal year 2000.

http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=0b30811a-152e-44a9-8006-2727dcbe2759

Which proves that doing like Reagan and Clinton did, by making the wealthy and corporations pay their fare share, actually helps to bring down the deficit without having to push granny off a cliff.

JustTheFacts on January 24, 2013 at 4:12 PM

The Congressional Budget Office said we could raise $114 billion over ten years — twice as much as raising the Medicare age — by limiting corporate tax deferrals.

We already covered this, Beautiful Mind. That’s 1% of the deficit, which means it’s a miniscule portion of the total budget.

Reagan raised taxes on the wealthy and corporations! As a mater of fact he raised taxes 11 times.

Reagan lowered rates and closed loopholes, the combination of which raises revenues significantly.

A lower, broader tax base has been the central element of the conservative tax plan for as long as I can remember. You’re happy to forget (read: neglect) that revenues have gone up in the wake of RATE cuts each of the last three times it was done.

I’m not sure what you mean about proving Reagan reduced the deficit: the deficit went up during his administration, because in the wake of his tax policies, revenues doubled over the course of his administration, but outlays tripled. The increase in government spending outpaced the rate at which the money was coming in. Thus, more debt.

The dirty secret of the Clinton surplus is that there was only a one-time, $86b surplus, the final year of the dot-com boom just before the economy slumped into recession. The $240b number, and previous surpluses, are bolstered by pushing around intra-governmental debt. In short, using Social Security surpluses to offset general-budget deficits.

Also, that surplus was driven by the boom itself. Expenses as a share of GDP went down, but the boom drove revenues up above 20% of GDP. Meaning, the economy itself is responsible for half the effort to balance the budget, the rest from reduced government spending.

In the modern era, revenues average around 19% of GDP. The recession pushed things down to about 15%. You don’t fix that gap by taxing the rich harder, you do it by putting back to work the EIGHT MILLION people who dropped out of the labor force in Obama’s first term.

Further, outlays are currently 24% of GDP. TWENTY FOUR. There’s no feasible way to tax the populace to 24% of GDP, especially with double-digit unemployment. You definitely aren’t going to do it by parading around the ten billion a year you intend to extract in corporate taxes.

The Schaef on January 24, 2013 at 5:38 PM

Ummm … JTF, you miss the whole “demographics” thing …

The Boomers weren’t retiring in the late 90′s like they are now & will continue to be for the next umpteen years.

Plus …. discretionary spending is significantly higher now (constant dollars) than it was in the late 90s.

Finally … you DO understand that money taken from “corporations” comes out of the pocket of “people”, right?

BD57 on January 24, 2013 at 9:11 PM