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  • Morning Bell: Honesty Only Solution to Deficits

    Yesterday in Oakland, Calif., in celebration of May Day, public school children were taught that the war in Iraq was to blame for proposed education funding cuts. Never mind that not a single dime of California’s $20 billion budget deficit went to defense spending; teachers’ unions weren’t concerned with the facts. If they were, they would be teaching their students that California’s budget crisis is due to both falling home prices and decades of voter-initiative spending mandates that have significantly shrunk the options legislators can consider in Sacramento.

    At the federal level, the source of the non-discretionary spending problem is different, and the scope of the crisis is much greater. Our three major entitlement programs, Social Security, Medicare and Medicaid are not subjected to the same budgeting process as all other federal spending. Spending on these three programs currently totals almost 10% of our gross domestic product. Unless taxes are raised, significantly mandated spending on these programs will crowd out all other spending (including defense) by 2052.

    The problem is so large, so imminent and so real that a bipartisan group of 16 federal budget and policy experts came together to issue a report documenting the extent of the problem and identifying a new policy that will help Congress deal with it more honestly. The Progressive Policy Institute’s Will Marshall explains today in the Wall Street Journal:

    The plan, conceived by Gene Steuerle and Rudy Penner of the Urban Institute, works like this: Congress and the president enact explicit, long-term budgets for Medicare, Medicaid and Social Security. With this one step, entitlements would be forced to compete for budget dollars with other vital national priorities. …

    Amazingly, discretionary programs, including defense, now constitute only 38% of all federal spending. Our proposal would end the ever-narrowing scope of congressional decision-making, and fully restore lawmakers’ constitutional power of the purse.

    The wide diversity of ideological backgrounds of the authors prevented them from coming together to recommend specific solutions to the problem (conservative Heritage experts favor privatization and raising premiums and deductibles, while more liberal experts favor raising taxes) but the authors of the report are all in agreement that bringing more transparency and honesty to the budgeting process will help all Americans.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

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