Five Budgets for a Broke-Down and Busted Amerika
As someone who's only a week away from retirement - just like Robert DeNiro in the incredibly shitty movie The Score, I plan to pull one last job and then retire to Montreal (or was it Quebec City?) to run a jazz club (or was it a Pilates studio?)! - I don't know how I keep getting pulled back into this shit. But here you go, a quick rundown of the various federal budget plans out there:
President Obama wants to spend $3.7 trillion next year and $5.7 trillion in 2021.
Rep. Paul Ryan (R-Wis.) wants to spend $3.6 trillion next year and $4.7 trillion in 2021.
The Republican Study Committee (RSC) wants to spend $3.6 trillion next year and $4.2 trillion in 2021.
Rand Paul wants to spend $3.7 trillion next year and $3.4 trillion in 2016.
The Congressional Progressive Caucus (CPC) has a "People's Budget" outline that, in keeping with representing a math-averse nation, doesn't include anything as straightforward as a series of annual-outlay numbers, though it does promise that outlays and revenues in 2021 will each equal 22.3 percent of GDP.
Then there's the plan that Veronique de Rugy and I cooked up: The 19 percent solution, in which federal spending is kept at 19 percent of GDP, which is what the CBO alternative scenario (known for its realism) said federal revenues would equal in 2020. We started writing about this last year, so our time frame is a bit different than the above. Given our druthers, we'd spend $3.3 trillion next year and $3.7 trillion in 2020 (in current 2010 dollars). That would mean total expenditures and total revenue would be in rough alignment though spending as a percentage of GDP would still be higher than it was in Bill Clinton's last budget (the cheapskate Clinton spent just 18.2 percent of GDP in his last year!).
When you look at the above figures, one thing seems pretty clear (to me, at least). Most of these scenarios are Sears Wish Books, plain and simple. Start at the top, with Obama's. By his own count, that $5.7 trillion of spending amounts to 23.1 percent of GDP in 2021. The CPC comes in at 22.3 percent of GDP. Paul Ryan comes in at 19.9 percent. Gillespie-de Rugy comes in at 19 percent. Rand Paul comes in at 18.7 percent and the RSC comes in at 18 percent.
The historic average of revenue from all sources from 1950 through 2010 was 17.8 percent. As noted previously, the CBO's alternative scenario projects that if taxes stay basically the same as they are now, revenue will equal 19 percent of GDP a decade down the road. To put that in perspective, the single highest year of revenue in the 20th century was 2000, when revenue came in at 20.6 percent of GDP and the best five-year average for revenue (1997-2001) comes in at 19.8 percent of GDP.
If balancing the budget is important (and it is), there's a strong argument for not spending more (and preferably less) than about $3.7 trillion come the start of the next decade. That's for everything - debt, entitlements, defense, you name it. A short while ago, it was common to talk about pushing a "reset" button when it came to foreign policy. That would be swell, but the same thing has to happen when it comes to government spending. There is simply no way to pay for budgets that spend, on average, 20.5 percent (Ryan's average over 10 years) or 22.3 percent or 23 percent of GDP. If there was, somebody would have found it already. That's the historical record speaking: In basically the best economic year of the 20th century, under a tax system that had hiked rates on high-income earners and cut rates on capital gains, we were able to pull one year at 20.6 percent.
And you can't stress enough that after that historic five-year average in the second Clinton term, even Al Gore was calling for tax cuts (and, incidentally, less new spending than Candidate Bush). Revenue surges, real and imagined (and they are mostly the latter) get pissed away pretty quickly. And even borrowed dollars just don't go that far in covering what people need: Federal outlays have increased over 60 percent in real dollars since Bill Clinton left office and what do we have to show for the splurge? How is it that we were able to feed the hungry and clothe the poor and care for the sick back when Bubba was in office and spending far fewer dollars relative to GDP?
While the Rand Pauls and RSCs of the world are considered draconian and out-of-hand and nihilistic by many not just on the left but in the center of politics, they are still spendthrifts relative to Bill Clinton. Jesus Christ, what a world we live in that a return to 2000's standard of living is seen as the equivalent of going back to Hooverville, USA.
NPR interviewed me for the weekend edition of All Things Considered. The show aired today and audio is up. Go here for a transcript and sound.
Veronique de Rugy and I discussed Ryan's budget plan on Stossel last Thursday. Here's a clip:
