Fiscal woes: The federal spending addiction
Raymond Michuda | Thursday, January 23, 2014
When I think about the sheer number of things wrong with our federal government, I get rather overwhelmed. It’s quite sad that I feel this way, but this is the reality of the modern day American political arena. If I were writing a book, I might have enough space to identify all of these problems, but since this isn’t the case, I want to talk about what I view as one of the most important issues in American politics, which is our federal government’s mind-boggling fiscal irresponsibility.
Currently, the government is about $17 trillion in debt, which comes out to $54,000 per citizen and $150,000 per taxpayer. Since September 2012, national debt has increased $2.5 billion each day. With this type of problem, you’d think Congress and the president would make a serious effort to fix it, right? But that’s operating under the assumption that our politicians behave rationally. This year, the government will spend $3.8 trillion while only receiving $3 trillion in revenues. It doesn’t take a Harvard Law degree to realize those numbers just don’t add up.
There are multiple factors causing this problem, but here I want to pinpoint the main cause and address that. Government spending is largely divided into two categories: discretionary and mandatory spending. Every year, the government can freely choose how much money to appropriate to discretionary categories, which include defense, infrastructure, education and other smaller budgetary items. As a whole, discretionary spending will make up about 30 percent of this year’s budget, with defense spending accounting for 20 percent of the total budget.
Mandatory spending, on the other hand, will account for 64 percent of this year’s spending. This type of spending is dominated by the entitlements (including Social Security, Medicare and Medicaid.) Spending for these programs is based on set eligibility requirements instead of yearly appropriations. The government can decrease mandatory spending by changing eligibility requirements or lowering benefits, but doing so reduces the amount of free money that people receive, which is political suicide. Therefore, there is far more control and oversight over discretionary spending, where the government must actively choose how much to spend each year, as opposed to mandatory spending, where the money spent is already decided by previously written laws. This notion has been demonstrated in the past 50 years, where mandatory spending has steadily eroded the discretionary share of the budget.
For those of you that think our spending problem is caused by defense, consider this: In 1963, defense spending was equal to about ten percent of GDP, and entitlement spending was about six percent. In 2013, defense spending was around four percent of GDP (and falling), while entitlement spending was around 15 percent and growing rapidly. Clearly, in the recent years of debt explosion, we’ve seen a significant increase in entitlement spending at the expense of defense funding.
To make matters worse, some of the entitlement programs will run out of money soon if current laws remain unchanged, with Medicare becoming insolvent around 2025 and Social Security following suit around 2035. Even though these entitlements are some of the most prominent expenditures in the budget, our mathematically-challenged politicians have found a way to set them on a path for destruction. The maddening part is that we’ll all be paying into Social Security for about 25 years, but if the Congressional Budget Office’s predictions are correct, we won’t get any of our money back. Personally, I dislike the concept of Social Security in the first place, but if we pay into the trust fund, we ought to get a return on our investment.
And it gets even worse: the “Affordable” Care Act will add $1.8 trillion to federal outlays over the next 10 years. To me, the Democrats’ insistence to retain this law is baffling. Spending this much money on a controversial new program when we already owe $17 trillion is blatantly irresponsible. The bottom line is the government needs to stop creating new spending programs because it cannot handle the ones we already have.
As citizens, we need to hold our politicians accountable, but we don’t. Instead, we keep electing the same people and expecting different results. If we don’t act soon to curtail our national debt, we will eventually get to the point where the government is consumed in a sea of interest payments, and entitlement spending has exploded to the point that our country can no longer afford to defend itself from foreign enemies. Raising taxes is simply not the answer. It doesn’t address the out-of-control growth of mandatory outlays, and it only provides more money to feed Congress’ spending addiction. The spending itself must be reduced, and we must elect people willing to do this. Until then, we’re left wondering what it would be like to have a President and Congress with foresight and common sense.
Raymond Michuda is a sophomore in the College of Engineering. He can be contacted at email@example.com
The views expressed in this column are those of the author and not necessarily those of The Observer.