Government Spending

D.C. Running Out of Other People's Money If It Doesn't Change Its Ways

Advocates of unlimited spending like to portray their proposals as a boon to the American people. But they are helping some by hurting others.


Dave Brat, the Tea Party's Cantor-killing missile from Virginia's seventh Congressional District, has been hammering away at two issues since winning election: immigration and federal spending. He's dead wrong about the first one. He's dead right about the second.

The other day, the congressman spoke to a group of business leaders in his district. If Congress does not do something about entitlement spending soon, he said, the country will be facing $127 trillion in unfunded liabilities by 2027. That's the gap between what D.C. has committed to spend and the amount of revenue it will collect through current tax policy.

By that point, just a few programs — Medicare, Medicaid, Social Security and interest on the national debt — will consume every cent Uncle Sam takes in. "How much money will there be at a federal level for education, military or transportation funding?" he asked. "Zero."

Brat's assertions have been vetted by Politifact, which found no major grounds for disagreement. It's possible that D.C. could push back the point at which entitlements and interest account for every single tax dollar to the 2040s. But that assumes Congress will stick with current policies, such as sequestration; allow tax cuts to expire when they are scheduled to; enact no new spending plans and expand no current ones — i.e., that it will do things for which it has no stomach, and which it has no record of having done in the past.


Just look at the "doc fix," which Congress killed off earlier this year. A couple of decades ago, Congress passed a balanced-budget act that imposed something called the Sustainable Growth Rate on Medicare. It was supposed to hold Medicare spending in line with GDP growth. That meant cutting payments to doctors. Naturally, doctors objected, so Congress started passing an annual "doc fix" to get around the spending limit.

This merely increased the size of the cut to physician reimbursement the following year, creating even more strenuous opposition from doctors. So finally Congress threw in the towel and gave up on the cuts altogether. President Obama signed the measure in a Rose Garden ceremony, hailing it as a great "bipartisan achievement."

The death of the doc fix is a case study in federal spending dysfunction. If Washington cannot even agree to abide by budget-cutting laws it already has passed, there is little hope it will stick with even tougher budget cuts in the years ahead. Hence the more realistic scenario from the Congressional Budget Office projects a future in which federal deficits of more than $1 trillion become the norm.

The national debt will grow from three-fourths of GDP by 2040 to more than 100 percent. As federal government debt piles up, it will crowd out private-sector investment, slow down economic growth (if there is any), and reduce per-capita GDP by about $2,000.


Mind you, this is the realistic budget scenario. But there is another, even grimmer scenario that might be just as likely. Call it the Tooth-Fairy Scenario. It could occur if Democrats take back the White House and enough of Congress to get their way.

Social Security is on track to run out of money in a couple of decades, yet lately Democrats have been not only resisting efforts to fix the problem but talking about expansion. Now they are advocating another entitlement: free or nearly free college for everyone. The sticker price for Hillary Clinton's proposal — modest compared with that of Bernie Sanders' — is $350 billion over 10 years, although the final bill could be much higher.

Clinton also wants the government to provide universal pre-kindergarten. Her economic proposals would cost "hundreds of billions of dollars," in the words of The New York Times. And she is a piker compared with Sanders, who wants to jack up spending over the next five years to $1 trillion — on transportation alone. Maryland Sen. Barbara Mikulski, another Democrat, has co-signed that idea.

Advocates of unlimited spending like to portray their proposals as a boon to the American people. But Brat points out that they are helping some by hurting others — namely, the future Americans who will be stuck trying to pay off ruinous levels of debt. For a picture of what that might resemble, have a look at modern-day Greece.

When most of the political class is promising more free stuff for everyone, a fiscal realist like Brat can sound like a figure from ancient Greece: Cassandra, the prophetess. We think of her today as a figure of doom and gloom, and it was her curse that no one listened to her. She and Brat might have that in common. So it is worth remembering that despite others' disbelief, Cassandra's prophecies came true.

This article originally appeared in the Richmond Times-Dispatch.