Every day is Christmas in Washington, and that’s exactly the problem
Forget a new car, Beats by Dre, or even affordable health care. You know what I really, really, really want for Christmas?
I want a government that spends less money. I’m not alone in such a wish. Even President Obama, who has asked for more and more spending in each of his annual budget proposals, has called the nation’s long-term spending patterns “unsustainable.”
We should be cutting small-ticket, medium-ticket, and big-ticket items, and we can do it in a way that doesn’t kick out Tiny Tim’s crutches or leaves us open to terrorist attacks. But first we need to understand the magnitude of the growth in spending over the past 10 years.
In 2003, the federal government shelled out about $2.2 trillion in nominal dollars. In 2013, it spent about $3.5 trillion. I have trouble figuring out exactly where that extra $1.3 trillion a year is going, but I do know that whatever money is spent by the generous souls in Washington, D.C. isn’t printed by elves. It comes from current and future taxes that you and I—or our children and grandchildren—will pay. According to the Congressional Budget Office (CBO) projections for the next 25 years, the government will never come close to matching outlays with revenues (which CBO already assumes will be significantly higher than the historical average for the past 40 years).
So the only path to sustainability is to cut spending. But where to cut?
Start with the small stuff. Last week, Sen. Tom Coburn (R-Okla.) released Wastebook 2013, which lovingly details around $30 billion in spending that amounts to stocking stuffers in the federal budget. These include $10 million in ads for the Army National Guard featuring Superman to $1.5 billion for keeping the lights on in “empty and little used federal buildings” to $7 billion to destroy weapons used by the U.S. military in Afghanistan. The Pentagon, says the Wastebook, worries that bringing home the old material will depress prices and new orders for defense contractors.
Any mention of defense spending suggests a much bigger areas to cut. Defense spending is the second-largest spending item in the budget. It’s part of what’s called “discretionary spending,” meaning that Congress authorizes a specific amount every year. Over the past decade, defense spending has increased by about 50 percent and remains one of the single-largest expenses in the annual budget. In 2013, for instance, the tab came to about $608 billion. With the end of two major wars—and the fact that the United States shoulders about 40 percent of all global expenditures on military might—that figure should come way, way down. Needless to say, the recent bipartisan budget agreement actually increases defense spending—that’s what bipartisan usually ends up meaning.
Spending by the Department of Education has grown by about 24 percent over the past decade, with nothing in the way of positive results (test scores for the nation’s high school seniors are exactly the same that they were for decades before there was a Department of Education). Increases can be found in virtually every cabinet-level agency, often without any compelling justification or positive outcome. Even the growth in such seemingly recession-driven expenditures such as food stamps predate anything related to the Great Recession. In fact, between 2000 and 2006, annual spending on food stamps doubled thanks to a pork-laden farm bill passed by George W. Bush and a Republican Congress.
Then there’s truly big-ticket items—the entitlement programs that make up the “mandatory” side of the budget, especially Medicare, which pays for health insurance for people who are 65 and older, and the retirement portion of Social Security, which provides income to older Americans. Despite the descriptor, there’s nothing truly mandatory about such programs. It just means that the programs’ costs are on auto-pilot and not subject to annual votes by Congress. That allows them to grow more consistently over time.
Social Security and Medicare were designed to help seniors at a time when being old meant being poor. That’s thankfully no longer the case, but the programs haven’t been revised to reflect today’s reality, either through means-testing or a reduction in benefits. They already account for more than one-third of annual outlays and by 2030 will account for more than half of federal expenditures as the population ages and, more importantly, benefits grow in dollar amounts. Between 1975 and 2011, the cost per beneficiary quadrupled in real dollars. Over the next 30 years, it will double again even as the number of people receiving benefits increases by 84 percent.
Such massive, across-the-board increases in spending are the very definition of unsustainable. But they also raise a different objection, one that goes beyond mere financial calculation. In a recent Gallup poll, a record-high 72 percent of Americans agreed that “big government” represents “the biggest threat to the country in the future.”
Of course it does. The more the government plays Santa Claus, delivering every gift we ask for and many more that nobody seems to want (or can afford), the more it gets to call the shots in your life and mine. Every day is Christmas in Washington, and that’s exactly the problem.