The Persistence of Fiscal Fantasy
It's time to get serious about government spending.
If the national fiscal crisis has accomplished nothing else, it has finally restored the good name of Ebenezer Scrooge. Frugal government, traditionally a contradiction in terms, has become a national ideal—as well as a national necessity. At last, Americans and their leaders recognize the need to justify every dollar spent.
Congress and the president recently agreed on a debt ceiling deal that consists entirely of cuts in outlays, not tax increases. A supercommittee of Congress will try to come up with additional ways to reduce the deficit, and failure will trigger large, automatic budget cuts amounting to $1.2 trillion over 10 years.
Even President Obama, who has labored heroically to acquaint the public with the meaning of the word "trillion," has changed course. His budget director is asking all federal agencies to submit plans to cut their projected spending by a full 10 percent in 2013.
The good news is that the idea of serious spending restraint has more support than ever before. The bad news is that getting people to support the concept is easy. The hard part is getting beyond the concept, and there is no sign so far of doing that.
Several Republican presidential candidates, including Michele Bachmann, Ron Paul, and Rick Santorum, have taken what sounds like an uncompromising stand. They've signed on to a plan sponsored by a group called Strong America Now to eliminate the federal deficit by 2017 without tax increases.
But the plan is not a plan. It's a fantasy. As Strong America Now's website explains, it is supposed to "detect and eliminate 25 percent of spending per year across the federal government." Per year. Seriously.
Not only that, but those cuts are supposed to excise nothing but vast quantities of waste—rather than programs that actual people care about. And my impression is that we'll pay for it all by raffling off unicorn rides and following leprechauns to find pots of gold.
The GOP's budget star is Rep. Paul Ryan of Wisconsin, who has specific plans to revamp the big entitlement programs that take up such an outsized share of federal obligations. What no one seems to have noticed is that even his controversial "Roadmap for America's Future" does little to rein in spending in the foreseeable future.
In fact, it would boost federal spending from 21.6 percent of gross domestic product in 2012 to 22 percent in 2016, 23.2 percent in 2026 and 24.1 percent in 2036. Not until 2051—40 years from now—would outlays drop below the 2012 level. As a result, the total debt would climb to 100 percent of GDP by 2043, a 50 percent increase.
This brand of thrift is perfectly attuned to public sentiment, which is for spending reductions in general and against them in particular. A January Gallup poll found that in only one area did a majority of citizens favor spending less federal money. The area? Foreign aid.
One reason Americans think they want big budget cuts is that they don't know what they'd be cutting. Most think foreign aid accounts for 10 percent of the budget, compared to the true figure of about 1 percent.
They also imagine that public broadcasting consumes 5 percent—when the reality is one-fiftieth that amount. They think federal employee pension costs are triple what they actually are.
Social Security, Medicare, and Medicaid soak up some 40 percent of the budget, and their share will expand as baby boomers sidle off into retirement. But in an April Economist/YouGov survey, only 7 percent of Americans—including just 9 percent of Republicans—favored lower funding for Social Security. Medicare? Also 7 percent, with 11 percent of Republicans agreeing.
Even the rise of the Tea Party and the fight over the debt ceiling have not caused people to come to grips with fiscal reality. An August Economist/YouGov poll found that 56 percent of Americans said we can bring spending under control without reductions in Social Security and Medicare. Only 24 percent admit what every fiscal expert knows.
Maybe the looming consequences of huge federal deficits will finally force the American public and their elected officials to sober up and agree on painful cuts in popular programs. But no one ever lost money betting on the opposite.
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