Whichever Debt Deal We Get, Our Government Is Getting Cleavered
Not too many people long for a return to 1962. But as Congress and the president debate how much government Republicans should get to lop off in exchange for not causing a US debt default, the most prominent plans in play all take our non-security appropriations back to the "Leave It to Beaver" era – or earlier.
A new study by the Economic Policy Institute (EPI) shows that over the next 10 years, the House Republican budget plan, the Bowles-Simpson plan, and both budget frameworks presented by President Obama all bring down non-security discretionary (NSD) spending as a percentage of GDP lower than it’s been in half a century. Such a drop, the report warns, “would cripple basic government functions and fail the needs of a growing population.” The report also shows that the majority of such spending goes to some form of public investment: education, infrastructure or research and development.
Reached by phone, the EPI economist who authored the report, Ethan Pollack, said, “We don’t just pass debt on to our kids. We pass on roads and bridges…we pass on knowledge capital and technological know-how. If we are cutting spending and thus decreasing financial debt, we could also be increasing another type of debt, an investment debt, because we’ll be passing on less of these other kinds of things.”
The things Pollack is talking about all fall under the NSD area of the federal budget. Discretionary spending is the portion that has to be appropriated each year, rather than being paid out automatically like Social Security, Medicare, or Medicaid. Non-security discretionary spending refers to what’s left after also leaving out military- and security-related programs like the armed services, the Homeland Security department, or veterans’ benefits (regardless of how some military programs actually affect our security).
As EPI notes, NSD represents only 15 percent of the federal budget and 14 percent of the past decade’s rise in federal outlays (adjusted for inflation). Pollack says NSD spending is a “black box,” in that “nobody knows who’s going to get hurt” when it gets cut. That makes it the area of the budget likely to face the deepest cuts.
If Paul Ryan’s House Republican budget plan were enacted, EPI projects that NSD spending would go down 57.6 percent over the next decade as a percentage of GDP. More troubling is that even under the original budget Obama sent Congress, it would go down 36.3 percent. Under the Bowles-Simpson plan, which is reportedly a basis for current “Gang of Six” talks, it would go down 41.7 percent.
For all the drama of the partisan debate over the debt, all the major players are committed (whether out of ideology or perceived political necessity) to a future in which discretionary non-security spending by the government plays a smaller role in the American economy. They aren’t debating whether we should have substantial cuts in NSD spending – which includes everything from home heating assistance to education assistance – as a share of our economy. They’re just debating how drastic those cuts should be.
Think about that, and then remember a spectacle that played out in May. Displeased when Democrats forced them to vote on Paul Ryan’s budget proposal (which takes an axe to NSD as well as to Medicare and Medicaid), Senate Republicans forced Democrats to vote on the budget Obama had introduced in February. Every Democratic senator present voted against it. Many justified their votes by saying that Obama’s February budget proposal had been supplanted by the more austere budget framework he announced in April, whose NSD spending cuts matched the size of those called for by Debt Commission co-chairs Erskine Bowles and Alan Simpson. Many observers took the Senate Democrats’ symbolic “no” vote as evidence they saw a need to distance themselves from the supposedly big-spending ways of their president. But the February budget proposal the Democrats voted against is the one that would reduce NSD spending as a percentage of GDP by a third over the next 10 years.
That sound you heard? It was the goalposts racing to the right.
What are we cutting when we cut NSD? Pundits have remarked that politicians refer to budget items they want to reduce as “spending” and budget items they want to increase as “investments.” In this year’s State of the Union address, Obama pitched a strategy to “Win the Future” by combining a five-year freeze on annual spending on the one hand and investments in “innovation, education and infrastructure” on the other. Obama bragged he would bring discretionary spending back down to Eisenhower levels, while also warning that “Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine.” So he would cut bad spending while strengthening smart investments.
But EPI’s analysis shows that public investment – education, infrastructure and research and development – is actually the majority of the NSD budget. In other words, the part of the plane Obama is looking to lighten is largely engine. As EPI writes, that makes it “a near impossibility” to increase public investment while making the kinds of NSD cuts contemplated by Obama, let alone the Republicans he’s negotiating with.
Given the makeup of the NSD budget, if Obama wanted to make his April framework’s 41.7 percent NSD cut while holding public investments constant as a share of the economy, EPI’s analysis shows he would have to cut all other NSD spending (a category that includes childcare and the FDA) by a whopping 84 percent. Under Paul Ryan’s budget, it would be mathematically impossible to maintain public investments’ current share of the US economy – even if you eliminated all other NSD spending entirely.
“In other words,” writes EPI, “it would be practically impossible to cut the non-security discretionary budget to the levels proposed in [any of] the various plans without either significantly cutting public investments or nearly eliminating everything else.” And the “everything else” includes programs like financial regulation and nutrition assistance.
Surveying these options -- Obama’s February and April proposals, Bowles-Simpson, and the House GOP budget -- EPI warns, “The numbers in these plans may add up, but to what? Crumbling roads and bridges, a second-class education system, a dirty and hazardous environment, lax consumer protections, and a government that can’t function.”
In other words, as politicians sit negotiating about the debt ceiling, it’s scary to think what a deal or lack thereof could bring. But what’s saddest is what the players agreed on before they ever got to the table: a role for discretionary non-security spending in our economy that would be more familiar to the Cleaver family than to us.