November 06, 2024
Editorial

BUDGET HOLES AHEAD

A fine example of the outlook of federal government could be seen last week, when Washington celebrated, albeit in a small way, the fact that the federal deficit for the year ending Sept. 30 would be only $260 billion, rather than the $290 billion estimated in March by the Office of Management and Budget. But as several commentators pointed it out, it’s actually worse than that.

For instance, while the 2006 number is improved, marginally, the 10-year deficit number looks worse, with annual shortfalls averaging $349 billion. Budget expert Stan Collender writes in National Journal that the long-term deficit dismal and even over the next five years the amount the federal government is expected to borrow will grow by $1.2 trillion, plus interest. “Not only would that be close to 17 percent of the budget” by 2010, he says, “it would be just $68 billion less that the amount [the Congressional Budget Office] projects the Pentagon will spend that year and only $24 billion less than what is projected for all domestic appropriations.”

It is not in Republicans’ interest to call attention to the fact that they, as the majority in Congress, keeper of the White House and leading advocate for cuts to federal revenue, have produced this budgetary hole. And it is not in the interest of Democrats, except in a vague political way, to trumpet that the government’s entitlement spending is unsustainable, with or without the recent tax cuts. Though members of both parties complain generally about the harmful effects of deficits, neither will act until the public gets irritated enough to demand what is painful but obvious: a combination of new entitlement limits and new revenue.

The person who has made this answer a personal crusade is David Walker, the comptroller general of the United States, who looks at the upcoming spending demands for Social Security, Medicare and financing the debt compared with the level of revenues and has a simple formula in response. To balance the budget by 2040, the nation can either cut spending by 60 percent or raise taxes by 2.5 times 2005 levels.

Neither will happen, of course, but answers as politically difficult should. For instance, an honest look at entitlements would begin the inevitable – means-testing for Medicare, smaller adjustments in Social Security and greater incentives for seniors to begin these benefits later in their lives.

The revenue side, too, demands leadership for equally unpopular ideas: a carbon tax that raises revenue while inspiring drivers to travel more efficiently, thereby reducing the challenge of climate change. And certainly, Washington has noticed the popularity at the state level of taxing sin. Tobacco and alcohol taxes produce revenue with minimal grumbling and help pay the health-care bills of those who suffer the effects of these products.

These long-term answers have a hard time competing with the short-term pieces of relative good news about the budget. They would be more easily accepted in Washington if the public demanded their members of Congress confront what is right around the corner.


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