May 27, 2016 | Commentary on Budget and Spending, Government Waste, National Debt

Boccia: Federal Budget Trumps Election Woes

With the media focused so heavily on the presidential election, perhaps it’s not surprising that few are paying attention as Congress takes up its annual spending bills. Besides, President Obama has said for years that our budget deficit is lessening, so we shouldn’t worry about it anymore, right?

Wrong: Budget data paint a very different picture.

A picture of the nation’s budget challenge, in fact, may be just what’s needed to wake us up to the enormous financial hole lawmakers keep digging. Some of the charts in The Heritage Foundation’s latest “Federal Budget in Pictures” presentation illustrate just how deep it’s become.

First, where does the federal government currently spend its money? More than half (52 percent) goes toward funding Social Security and toward federal health care programs such as Medicare, Medicaid and Obamacare. These are also the budget areas that are experiencing the greatest growth in spending. They alone will drive more than half of the projected growth in federal spending over the next decade. Add in growing interest on the debt, and that’s 85 percent of projected spending growth right there.

Indeed, federal health care programs and Social Security plus interest on the debt are projected to consume all federal tax revenues by 2033, when today’s babies graduate high school. Where will the money come from to finance critical federal priorities, particularly our nation’s defense? Taxes would have to be raised to economically crushing levels, or borrowing would go into dangerous overdrive. Either way, our current budget trajectory is highly unsustainable.

The share of the public debt per American is already too high: more than $42,500. Children born today will be burdened with nearly $70,000 in public debt the year they reach 18. Tax the rich, you say? The top 10 percent of income earners already pay for 70 percent of the entire income tax burden. How much more can we squeeze out of them?

With the highest corporate tax rate among industrialized nations driving companies and jobs abroad, raising taxes on corporations isn’t a viable option either. Most importantly, for government to consume even more of what the private sector produces is a recipe for stagnation, one that offers less opportunity for Americans from all backgrounds.

In the long run, raising taxes to keep up with spending outpacing economic growth is unworkable. Taxes are what government takes out of the economy. The tax base can grow faster than the economy for only so long before taxes swallow the economy. On this path, government will kill the golden goose.

Spending cuts and entitlement reforms are critical to putting the budget on a path to balance. Medicare reform must be the highest priority. The aging baby boomer generation and rising health care costs mean that Medicare is growing rapidly and without restraint.

Policies such as premium support, increasing the retirement age, and reducing subsidies for higher-income retirees will make a big difference in the fiscal outlook. Medicaid and Social Security reform must not follow far behind. And Congress should continue to dismantle the Affordable Care Act, which is affordable in name only.

Congress must start with fiscal prudence this year, by staying below the spending caps put in place to control the portion of the budget that’s still under their discretion. Congress is planning to spend $30 billion more than those caps allow while authorizing additional emergency spending to fight public health risks such as the Zeka virus. Congress can fund national priorities without going over budget. Now is the time for restraint.

Whether Congress is conveniently looking the other way, or whether fiscal concerns have temporarily faded from the public consciousness, the nation’s fiscal course demands attention. Waiting until the bill comes due soon won’t be an option anymore.

About the Author

Romina Boccia Deputy Director, Thomas A. Roe Institute for Economic Policy Studies and Grover M. Hermann Research Fellow
Thomas A. Roe Institute for Economic Policy Studies

Orriginally appeared in The Tribune News Service