As this year quickly draws to a close, we are once again approaching a federal spending deadline that will likely be postponed with yet another temporary spending bill. In the last 40 years, Congress has enacted 175 of these continuing resolutions to avoid doing its job. This will be the 176th continuing resolution since the modern budget process was established.
The November election results showed that the American people are eager for change. With a new President taking the oath of office on January 20th, Congress has an opportunity – and responsibility – to get back to work. One of our top priorities must be fixing America’s broken budget process to provide our nation with a responsible fiscal blueprint and help guide our spending decisions now and into the future.
AMERICA’S COMING FISCAL CRISIS
America is on course for a fiscal disaster. Sadly, that’s not going to surprise many people. We all know the statistics: $20 trillion in debt, on track to grow to $29 trillion in 10 years; unchecked entitlement spending that consumes 70 percent of the budget, and the imminent return of trillion-dollar deficits. Everyone knows we’re in deep trouble. But what’s surprising is that Congress is not considering ways to fix it. The country’s finances are in a perilous position, and the federal government has refused to act.
That’s because, when it comes to spending money, Congress is kind of like a binge eater. We don’t want to start our diet until right AFTER the next dessert, and we never seem to run out of ideas for new desserts. That attitude has led to a mammoth, oversized debt burden that will crush future generations’ prosperity.
The first step to spending within our means is to establish healthy habits. We should stock the fridge with fruits and vegetables, not cake and cookies. Unfortunately, America’s broken budget process does the opposite. It makes it easy for Congress to spend and spend without ever checking its fiscal waistline. And Congress never has to consider the fiscally healthy options that would put our budget on a better path.
America’s looming fiscal crisis actually has its roots in the way America’s budget and spending process is laid out. Thirty percent of the federal budget is provided annually by Congress. This money funds the activities that most people would associate with good government, such as national defense, education, and infrastructure spending. This is the portion of the budget that attracts the most congressional scrutiny. We have limits in place that make it very difficult to spend more than what’s allotted, and those limits are the subject of fierce debate and negotiation every two years or so. We also must pass spending bills to fund these government activities every year, forcing a public debate about where taxpayer dollars should be spent. This portion of the budget is not growing rapidly and is not the cause of our unsustainable fiscal course.
The real culprit is the other seventy percent of the federal budget. This portion is spent automatically, without regular congressional action or review. In just 15 years, it will consume ALL government revenues, as debt interest payments and entitlements continue to grow rapidly. There are no effective limits to the amount that can be spent on this side of the budget, at least until this spending drives America into bankruptcy.
This is how the budget process makes it easy to spend money. There is regular review and strict limits on the small and shrinking portion of the budget. But the much larger automatic spending programs are not regularly reviewed and can grow almost without limit.
Some automatic spending programs have a dedicated source of revenue. For example, Social Security, Medicare and Unemployment benefits are funded in part by payroll taxes and insurance premiums. This makes sense. If Congress is not going to regularly review a program, there should at least be a source of funding to ensure the program is sustainable.
However, the automatic programs that receive dedicated revenues are grossly under-funded, and many others do not receive any dedicated revenues. That means our government is making promises to pay for these programs even though we don’t have any idea where the money will come from.