President Obama is set to announce a three-year freeze in discretionary non-defense spending. The problem is, that’s not where the problem is. Those programs total $447 billion; the deficit this year is $1.4 trillion. In other words, you could eliminate those programs three times over and still face a deficit.
But it’s a start, a gesture. A lot of the current-year deficit is not caused by increased spending, but by collapsed federal revenues. Total federal revenue last year was just 15.1 percent of gross domestic product, a sharp drop from its average level of above 18 percent. In dollar terms, revenue isn’t projected to return to 2007 levels until at least 2011, and in the meantime the government is incurring additional expenses such as extended unemployment and aid to state budgets. Folks at the state Capitol are already in a panic over how to balance their own budget; ask them how many teachers and prison guards they would have to lay off without the federal stimulus money and they’ll turn pale in the face.
Obama is also pushing plans for a bipartisan deficit-reduction commission that by the end of the year would present Congress with a program on how to move us back toward fiscal reality. Congress would have to vote up or down on that package — no amendments. But that isn’t likely to pass. As the Washington Post notes, Senate Minority Leader Mitch McConnell “has turned against (the) proposal after endorsing it in Senate speeches last year. The reversal … coincided with word that anti-tax activists such as Americans for Tax Reform’s Grover Norquist was opposed.”
In other words, if deficit reduction requires tax increases as part of the package — which it will — the GOP wants no part of it. Of course, liberal Democrats also aren’t eager to swallow the other part of the required package, which would be cuts in entitlement programs. So congressional approval of that approach is unlikely.
As an alternative, President Obama may try to achieve the same goal by executive order, creating a bipartisan commission on his own to come up with a plan for a vote later this year. But House Minority Leader John Boehner has suggested that Republicans named to that commission might refuse to serve.
So there we are. Stuck with minor steps such as the spending freeze.
“Given Washington Democrats’ unprecedented spending binge, this is like announcing you’re going on a diet after winning a pie-eating contest,” Boehner spokesman Michael Steel said in response to the freeze idea. “Will the budget still double the debt over five years and triple it over 10? That’s the bottom line.”
For the record, the national debt more than doubled under President George W. Bush. And it more than tripled in the 10-year period beginning in 1982, when Ronald Reagan took office, and 1991, when the elder President Bush sat in the White House.