Our Spending Problem

By JEFFREY H. ANDERSON

The failure of the supercommittee marks a good time to highlight just how out of control our federal spending really is. To see the matter in a clearer light, let’s leave aside all disputes over tax revenues for the time being, and focus purely on spending.

The Congressional Budget Office (CBO) says that federal spending has increased from $2.73 trillion in fiscal year 2007 to $3.60 trillion in fiscal year 2011. That’s a whopping 32 percent increase in just five years. (Americans should have been so lucky with their incomes.) That figure has nothing to do with diminishing tax revenues. It is strictly the amount by which federal outlays have increased. 

Looking forward, the CBO projects that the federal government will spend $5.68 trillion in 2021. That’s an increase of 58 percent over 2011, and 108 percent over 2007. In other words, on our current trajectory, annual federal spending will more than double over the 15-year span from 2007 through 2021.  

Given this substantial level of projected growth in federal spending, it doesn’t seem like it would have been very hard to cut $1.2 trillion off of that number — thereby cutting 2021 spending from $5.68 to $4.48 trillion. Even $4.48 trillion in spending in 2021 would be an increase of 64 percent versus 2007 spending. 

But that’s not what the deficit committee was charged with doing — it wasn’t charged with cutting $1.2 trillion from fiscal year 2021 spending. Instead, it had a far, far easier task. It needed only to cut spending by that amount over the entire decade from 2012 to 2021.

Across that whole decade, the CBO currently projects that the federal government will spend $45.77 trillion. The deficit committee was charged with trimming deficit spending by just $1.2 trillion, which could have been achieved by cutting that $45.77 trillion in spending by just 2.6 percent. (Really, it would have necessitated cutting spending even less than that, because any cut in spending also reduces future interest payments on the debt.)

To be clear, this wouldn’t have resulted in an actual cut in federal spending. Instead, annual federal spending would still have been 24 percent higher (on average) over the next decade than it was last year. Really, the deficit committee didn’t need to cut spending at all (in relation to 2011 spending). It simply needed to shave 12 cents off of every dollar of projected increases in spending. Yet, in the face of a $15 trillion national debt, the deficit committee couldn’t figure out how to do even this. It couldn’t bear to force the federal government to make do with just $44.57 trillion over the next decade, instead of $45.77 trillion.

Or, rather, one party’s deficit committee membership couldn’t bear to do this — as that party’s membership instead focused primarily on trying to raise taxes. Meanwhile, each of the members from the other party had already voted for the 2012 House budget, authored by House Budget Committee chairman Paul Ryan, which would have cut federal spending by $5.81 trillion, and 13 percent, versus current projections — or about five times the 2.6 percent that would have done the job for the deficit committee. The Ryan budget, which passed the House, would likewise have prevented 59 percent of the increase in average annual spending from occurring — or about five times the 12 percent reduction that would have done the job for the committee.  (And that’s without any significant Medicare reforms, which weren’t slated to happen inside the 10-year budgetary window.)  Meanwhile, the party that controls the Senate hasn’t passed a budget of any sort through its chamber in almost three years.

Despite this previously demonstrated commitment to cutting spending on the part of one-half of the deficit committee members, the committee failed to do something that should have been very easy to do. It couldn’t find a way to cut $1.2 trillion, or just 2.6 percent, from the $45.77 trillion in projected federal spending over the next decade — or to trim just 12 cents out of every dollar of projected spending increases.

Even in its failure, however, the deficit committee still did better than President Obama, whose budget not only wouldn’t have cut spending one dime versus current projections but actually would have increased it — by $402 billion (see table 1-1). So, even in failure, the deficit committee improved upon the president’s offering by 12 figures.

Why did the committee fail? Because when Republicans and Democrats are brought together to tackle the challenge of runaway federal spending, it’s like the sound of one hand clapping. Nearly $5 trillion in increased debt into the Obama presidency, only one party is making any real effort to bring our profligate spending under control.