According to the Center on Budget and Policy Priorities (CBPP), the federal government is projected to spend less money in the next decade on non-defense discretionary programs than at any point since at least 1962. This is a result of the Budget Control Act of 2011.
Two-fifths of the $1.5 trillion in savings from cutting and capping funding for discretionary programs comes from defense, while the other three-fifths comes from reductions in domestic and international programs. These reductions will shrink non-defense discretionary spending to its lowest level on record as a share of GDP, with data going back to 1962.
The $1.5 trillion in reductions in discretionary spending also will produce lower interest payments on the debt. The interest savings amount to about $250 billion, bringing the total deficit reduction achieved to date to more than $1.7 trillion.
The average person may not know exactly what is meant by non-defense discretionary spending. The Center for American Progress (CAP) defines it this way:
What is in this category of spending with the inelegant and painfully nondescript title that is now projected to dwindle to unprecedented levels? It includes nearly all of the federal government’s investments in primary and secondary education, in transportation infrastructure, and in scientific, technological, and health care research and development. It also includes nearly all of the federal government’s law enforcement resources, as well as essentially all federal efforts to keep our air, water, food, pharmaceuticals, consumer products, workplaces, highways, airports, coasts, and borders safe. It includes veterans’ health care services and some nutritional, housing, and child care assistance to low-income families. It even includes the funding for such national treasures as the Smithsonian Institution, our national parks system, and the National Aeronautics and Space Administration, better known as NASA.
You might define this as “nice things,” which we apparently are no longer allowed to have. Even if the sequester is completely cancelled, CAP projects that we will spend 14% less on nice things by 2017 than at any point in our modern history. So, we can’t possibly have a spending problem in this category. What about defense spending?
Well, CBPP points out that, because of the wind down of the Bush Wars, projected spending is already down by a half trillion dollars. The Budget Control Act shaved another $487 billion off projected Pentagon spending. Adjusted for inflation, we are still spending a tremendous amount on the military, but it isn’t rising. For perspective, even if the sequester goes into effect and takes another half trillion away from the Pentagon, we will still spend more in 2013 than we did in 2006, during the height of the Iraq War. Under Obama, defense spending is very high but it is going down. There is plenty of room for it to go down further, although the Defense Department thinks the cuts in the sequester go too far.
While you can argue about the correct budget for defense, it makes no sense to say Obama is spending too much unless you are willing to say that Bush was spending too much, as well.
That leaves entitlement programs. First of all, according to CBPP, over 91% of entitlement spending goes to the elderly, the disabled, or people who worked at least 1,000 hours in the last year. Much of the rest goes to people who worked enough to be receiving unemployment benefits. These people are not “takers” in the Mitt Romney/Paul Ryan sense. Yet, according to a 2009 study by the non-partisan Congressional Budget Office, “Total spending for Medicare is projected to increase to 8 percent of GDP by 2035 and to 15 percent by 2080. Total spending for Medicaid is projected to increase to 5 percent of GDP by 2035 and to 7 percent by 2080.” Those are pre-ObamaCare numbers, but there is no denying that inflation in medical spending is a major problem that will continue to crowd out spending for all other purposes.
The question is, what should we do about it? Let’s consider taxes and revenue. It is not only “mostly true” that CEO’s and hedge-fund managers are paying the lowest effective tax rates since the 1950’s (a period before Medicare and Medicaid), but it’s true about everyone else, too. As a percentage of GDP, only South Korea, Turkey, Chile, and Mexico raise less revenue than the United States. Simply put, we are taxing at a historically low level. It seems to me, then, that we have a revenue problem.
We have a revenue problem and we have a medical inflation problem, and we spend too much on defense. So, should we start slashing the earned benefits people have paid into in Medicare and Social Security? I would argue that we ought to raise taxes before we even think about doing that. But we also need to do more to address the rising cost of health care. That has been the Obama administration’s approach. Yet, cognizant of political realities, they also know that the must make compromises if they want Republican votes. That is why Obama has talked about taking a balanced approach. That’s what the American people basically voted for, and they continue to support it (at least in general terms) in the polling data.
So, the GOP can keep saying that we have a spending problem, but we have a much more clear-cut and inarguable revenue problem. And if you ask people what spending they want to cut, they do not say that we ought to ravage people’s retirement security.
Overall, it’s simply misleading to argue that our budget woes are a result of too much spending. And, to the degree that it has some truth, the people don’t agree with the Republicans’ solutions.
