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.
Breaking on Hot Air