We have a table on which to spread our tables. Let’s check out the numbers. The federal budget deficit, which at multiple points during President Obama’s administration was higher than a trillion dollars, is set to shrink this year to $468 billion. If the projection holds, it will technically* mark the sixth consecutive year that the yawning gap between expenditures and revenues — “yawning” having a distinct definition depending on political affiliation — will have decreased.
Without context, this looks like good news. With context — that the deficit reduction is from both a drop in spending growth and a rise in tax receipts as the economy has improved from dreadful to better — the ruling on the field is confirmed.
Take it away, Shia.
Why not be more excited? The news reports certainly are, noting that the predicted 2015 deficit would be the lowest one of the Obama years. In fact, “Declining budget deficits … could reduce pressure on Congress to continue addressing the government’s finances,” the AP suggests.
“Over the last few years as deficits have fallen, so too has the effectiveness of Republican rhetoric about a ‘big government’ boogeyman,” Sen. Chuck Schumer, a Democrat, says.
This is a misplaced line of thinking. There’s an elephant in the room about this deficit and debt stuff alright — it’s just not a Republican. It’s the fact that spending is on track to soon erupt, outpacing the expansion of the economy and sending deficits skyward again. The Congressional Budget Office, a nonpartisan agency that provides budget and economic information to Congress, reported two key facts Monday: one, that federal expenditures are slated to increase by 50 percent between 2017 and 2025, and two, the economy’s growth is expected to flatten during the same time.
This will cause the deficit to hit $1.1 trillion by the year 2025. And no one wants to talk about it, because the main spending drivers of the problem are, surprise, politically sensitive.
The CBO lists them as (emphasis mine):
The retirement of the baby-boom generation,
The expansion of federal subsidies for health insurance,
Increasing health care costs per beneficiary,
Rising interest rates on federal debt.
What programs are tied to this? The same ones spending hawks have been griping to fix for years: “[U]nder current law, spending will grow faster than the economy for Social Security; the major health care programs, including Medicare, Medicaid, and subsidies offered through (Obamacare’s) insurance exchanges; and net interest costs.”
We’ve known for years that an entire generation of workers was going to hit retirement age at a certain point. We’ve known for years that the subsequent increase in spending on these programs was going to balloon the deficit if we didn’t alter the programs or take action to offset their costs. Commissions like the president’s own debt reduction panel — a bipartisan group that included Paul Ryan and Bill Clinton’s former budget chief — have proposed substantive reforms that would save the programs and save Americans money, saying of health care, “Federal health care spending represents our single largest fiscal challenge over the long-run,” and saying of Social Security, “Without action, the benefits currently pledged under Social Security are a promise we cannot keep.” That report was from 2010.
As now-retired Sen. Tom Coburn was quoted in the commission’s product, “We keep kicking the can down the road, and splashing the soup all over our grandchildren.”
If you’re a millennial reading this, that’s us, and that’s our kids.
That the country’s overall fiscal state has improved in the short term is positive and welcome news (if inadequate news, given stagnant wages and the curious number of workers who have dropped out of the labor force). That the country’s overall fiscal outlook in the medium and long terms hasn’t budged all that much because of inaction on the debt drivers we’ve seen coming for miles continues to be the big news.
“Beyond the coming decade, the fiscal outlook is significantly more worrisome,” Monday’s CBO document reads. “Although long-term budget projections are highly uncertain, the aging of the population, the growth in per capita spending on health care, and the ongoing expansion of federal subsidies for health insurance would almost certainly push up federal spending significantly relative to GDP after 2025 if current laws remained in effect. Federal revenues also would continue to increase relative to GDP under current law, but they would not keep pace with outlays. As a result, public debt would exceed 100 percent of GDP by 2039, CBO estimates, about equal to the percentage recorded just after World War II.”
Such a level would hike the risk of a fiscal crisis, and the trajectory of the economy at that point would bode even worse. There’s no getting around it, much as Washington has tried: lawmakers will have to act.
Preferably, it’ll be the 50-year-old ones born closer to 1964 than 1989.
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* Not counting Social Security and Postal Service spending — which are automatically dictated by law — the deficit has dropped each of the last six years. Including it in the total deficit figure, however, there was a small uptick from 2010 to 2011. The total number (which also happens to be the lower one) is the number being widely cited, but it’s misleading to quote it each of the last six years and say the deficit has dropped year-over-year during that stretch.
