Budget deal is nothing to celebrate
The two-year federal budget deal reached this week proves that pragmatism doesn’t come cheap in Washington.
The two-year federal budget deal reached this week proves that pragmatism doesn’t come cheap in Washington.
The twin benefits of avoiding a government shutdown and a default on U.S. government red ink were purchased by (again) ditching spending caps set in the Budget Control Act of 2011 and spending $320 billion above them.
Sadly, most of the costs of the deal will be paid by future generations. It sets a course of two years of borrowing about $1 trillion per year, equivalent to about a quarter of red ink for every federal dollar spent.
It would seem that our $22 trillion national debt is so large that it’s considered better off ignored.
Not only did 1992 and 1996 Reform Party presidential candidate Ross Perot pass away this year, so did the on-again, off-again resonance of his call for fiscal restraint.
Following his 1992 bid for president, which drew 19% of the vote nationwide, Perot’s message got attention in Washington. The budget deficit fell each year after 1992 and during 1998-2001, the federal government ran a surplus.
Deficits were moderate until a $1.4 trillion peak was hit in 2009, with the red ink staying above $1 trillion through 2012.
That stretch led to the Tea Party movement and a Republican-led House’s insistence on fiscal restraint in exchange for their votes for a rise in the debt limit.
While the threat to the nation’s credit was not a responsible act, their aversion to red ink was commendable.
And, at least for a brief period, their fix, the Budget Control Act, was effective as well. Deficit spending was limited to about a half-trillion dollars per year for three years and under a trillion through last year.
The bill that led to deficits of $484.8 billion, $442 billion and $584.7 billion in 2014-17 often led Congress to cheat — raising caps or pushing spending cuts into the future — but at least the spirit was kept alive.
The caps were there as a check on spending, one Congress would at least have to acknowledge as a goal.
The recent budget deal reached by the White House and Democratic congressional leaders essentially surrenders to red ink of $1 trillion per year for the foreseeable future.
The White House even gave up on demands for future offsetting spending cuts.
The path to this week’s total surrender to normalizing annual seven-figure debt levels was put in motion last year, when spending caps were raised by $296 billion, with less than $50 billion in offsets over a decade serving as the lipstick on that year’s pork project of a budget plan.
This week’s budget agreement doesn’t even bother with a bow to fiscal responsibility. The Budget Control Act’s caps were allowed to lapse.
Each side pointed to what it got — $56.5 billion in extra non-defense appropriations for Democrats; and $46.5 billion more for defense, which President Donald Trump trumpeted on Twitter as “another big victory to our Great Military and Vets!”
Future taxpayers will face either paying significantly higher taxes or accepting lower spending everywhere else to finance debt payments.
“This agreement is a total abdication of fiscal responsibility by Congress and the president,” said Maya MacGuineas, president of the Committee for a Responsible Budget, a Washington advocacy group for fiscal sanity.
According to the group, interest on the debt totaled $325 billion last year and will rise to match defense spending by 2024.
The group also projects that interest on the federal debt will increase from 1.6% of gross domestic product to 3% by 2029 — “surpassing the post-WWII record set in 1991 when interest payments were 3.2% of GDP.”
With stock market values and job openings in historic territory, national debt should not be setting new records. Boom times are just when government should spend no more than it collects in taxes.
This is no time to sweat a little fiscal discipline from fiscal hawks for their votes on raising the debt limit. And, minus the recent fiscal irresponsibility of cutting taxes while boosting spending, it would be no struggle at all.
The saddest part about the recent budget agreement is that the red ink itself was the essential ingredient in the declarations of victory that came with its announcement. This raw deal for future taxpayers is nothing to celebrate.