How Many More Times Can Congress Kick the Can?

COMMENTARY Budget and Spending

How Many More Times Can Congress Kick the Can?

Aug 1st, 2019 2 min read
COMMENTARY BY
Justin Bogie

Senior Policy Analyst in Fiscal Affairs

Justin Bogie serves as Senior Policy Analyst in Fiscal Affairs at The Heritage Foundation.
Lawmakers chose to ignore their fiduciary responsibility and kick the can down the road for another day. phakimata/Getty Images

Key Takeaways

The budget “deal” Congress is cobbling together would add trillions of dollars more to our already unwieldy national debt.

Federal spending is anything but austere. This fiscal year, the feds will spend some $13,500 for every person in America.

Debt limit and budget negotiations offer an opportunity for Congress to take stock of the nation’s fiscal condition and have a frank discussion about priorities.

Something good is supposed to come of a deal. Yet the budget “deal” Congress is cobbling together would add trillions of dollars more to our already unwieldy national debt. That’s nothing for taxpayers to cheer about.

The latest agreement also is no victory for bipartisanship. As Leon Panetta, formerly both a House Budget Committee chairman and an Office of Management and Budget director: both parties “so easily agreeing to fiscal defeat isn’t bipartisanship, it is broken governance.”

What, exactly, would the Bipartisan Budget Act of 2019 do? It effectively raises discretionary spending by $322 billion over the next two years and officially ends any pretense of capping spending thereafter. The Committee for a Responsible Budget estimates that the deal will increase the national debt by $1.7 trillion over 10 years.

That’s because the “deal” contains virtually no cuts to help offset higher spending. The Congressional Budget Office estimates a paltry $54.5 billion in offsets through 2029 — an amount less than just the increase in interest payments resulting from the higher spending. Adding insult to injury, the deal also “suspends” the debt limit for two years, giving the federal government unchecked borrowing authority through July 2021.

Back in 2011, then-businessman Donald Trump tweeted that the debt limit couldn’t be raised until “Obama spending is contained.” And that’s exactly what should and did happen. With bipartisan support, Congress passed the Budget Control Act, which put in place a mechanism to cut spending by $2.1 trillion in exchange for an equal increase in the debt limit.

Unfortunately, the president and other lawmakers have short memories. Last week, Rep. Nita Lowey, a New York Democrat who had voted in favor of the 2011 law, said that “I am proud that this agreement ends the senseless austerity imposed by the Budget Control Act.”

Federal spending is anything but austere. This fiscal year, the feds will spend some $13,500 for every person in America.

Congress has tried to tie its own (profligate) spending hands before. From the mid-1980s through much of the ‘90s, lawmakers enacted binding restraints on the federal budget. When the Balanced Budget and Emergency Deficit Control Act of 1985 (i.e., Gramm-Rudman) was enacted, discretionary spending was just below 10% of GDP. By 2001 (the last time Washington balanced its budget) discretionary spending had fallen to 6.2% of GDP.

The spending restraints expired in 2002, and discretionary spending began rising more quickly. But what really took off was what the politicians call “mandatory spending” on entitlement programs such as Social Security, Medicare and Medicaid.

Congress doesn’t even budget spending for these programs — they increase automatically. And today they account for more than three-fifths of all federal spending.

That brings us to something that Democrats and Republicans should agree on: We simply cannot fix our budget mess by focusing only on discretionary spending. The only way to put the budget back on a path to lower debt and long-term sustainability is through reforming entitlement programs.

Social Security, Medicare and Medicaid alone account for nearly three-quarters (72%) of all projected spending growth over the next decade. In just 22 years, entitlements and interest payments on the debt could consume all federal revenues.

Social Security and Medicare simply aren’t sustainable in their current forms. Both Social Security’s Old-Age and Survivors Insurance trust fund and Medicare’s trust fund are on track to hit insolvency within 15 years.

Instead of increasing the deficit and piling on more debt, Congress could — and should — implement entitlement reforms to pay for whatever increases in discretionary spending they feel are necessary. And that’s what’s so sad about this latest “deal.”

Debt limit and budget negotiations offer an opportunity for Congress to take stock of the nation’s fiscal condition and have a frank discussion about priorities. Instead, lawmakers chose to ignore their fiduciary responsibility and kick the can down the road for another day.

This piece originally appeared in The Washington Times on 7/29/19