In the last three months, the biggest battle in Washington has been about carving a relatively tiny amount of money out of this year’s $3.7 trillion budget. But while Republicans, Democrats and the White House bickered over whether to cut anywhere from $61 billion to $33 billion - or else shut down the government - a far bigger battle looms in the months ahead over the fiscal 2012 budget and trillion-dollar deficits as far as the eye can see.
House Republican budget leaders unveiled their budget proposals Tuesday that called for spending reductions on the order of $6.2 trillion over the next decade. It tackles entitlements as well as discretionary spending cuts that will make this week’s fight over the fiscal 2011 budget look like an attempt to break into a child’s piggy bank.
The question is, will the emerging story be all about the GOP’s attempt to reform fiscally unsustainable entitlement programs or about extreme spending increases by President Obama and the Democrats? To a large degree, that will depend on how the House GOP leadership frames the issue and their proposals.
Mr. Obama came into office in 2009 facing a budget deficit in the $400 billion range under President George W. Bush, largely the result of a fierce 2008-09 recession that sharply cut federal tax revenues.
According to the nonpartisan Congressional Budget Office, the administration’s spending policies are now expected to produce budget deficits of $1.5 trillion and $1.11 trillion, respectively, in fiscal years 2011 and 2012.
Annual government spending over the next decade will grow by 57 percent - from $3.7 trillion this year to nearly $6 trillion 10 years later in 2021.
Meantime, interest payments on the government’s debt will rise meteorically from $214 billion to $931 billion over this same period, a monster 335 percent increase.
CBO says yearly budget deficits will average nearly $1 trillion ($947 billion) over the next 10 years if we stay on our present spend-and-borrow course - totaling $9.5 trillion.
Mr. Obama’s budgeteers insist that in 10 years, the debt held by the public and foreign countries will total nearly $19 trillion. But CBO says it will actually double to $21 trillion, reaching a frightening 87 percent of our economy’s entire gross domestic product.
“Such a path is clearly unsustainable and demonstrates the need for deep reductions in federal spending if debt is brought under control,” the Heritage Foundation says in a recent analysis.
Democratic leaders continue to deny there is anything seriously wrong with any of our entitlement programs that now account for 60 percent of all federal spending. New York Sen. Charles E. Schumer, the Democrats’ budgetary point man, says Medicare and Medicaid can be fixed just “by making them run more efficiently.” Sure.
Mr. Obama, who doesn’t want to get his hands dirty with the hard work of entitlement reform, has offered no proposals to repair programs that every study says are headed for insolvency.
“Failure to implement entitlement reform compromises the economic future of the country and would leave an unacceptable tax burden that families and businesses must bear,” Heritage says.
But that’s exactly what Mr. Obama and the Democrats want: to drive up spending to such unsustainable levels that tax increases “on the rich” and big business would be the only politically viable alternative to keep Social Security and Medicare functioning.
This, of course is the demagogic debate Democrats want to have in the 2012 election cycle. With half of all the states still struggling with jobless rates of between 9 percent and 14 percent, they need a big issue to win back disaffected independents who fled their party in last year’s midterm races.
House Republican Budget Committee Chairman Paul Ryan’s plan to cut spending by $6.2 trillion over 10 years - with a huge whack at entitlements - may give them one.
His plan would impose strict caps on discretionary spending, curb farm subsidies, reduce the federal workforce, cut defense programs the Pentagon does not want and repeal Obamacare.
On entitlements, he would block grant Medicaid money to the states and let them run it, which would lead to needed innovations and potentially big savings.
At this writing, there were no details on Social Security, but on Medicare - the other third rail of American politics - he would let seniors choose from a range of private insurance plans that Medicare would subsidize.
During the bitter battle over Obamacare, Republicans scored big political points with seniors by pointing out it would be financed in large part by cutting $500 billion from Medicare.
The ink on Mr. Ryan’s Medicare plan was hardly dry before it came under attack from Maryland Rep. Chris Van Hollen, the top-ranking Democrat on the Budget Committee, who said the plan called for “eliminating guaranteed benefits for seniors under Medicare.”
Mr. Ryan’s overall budget-cutting plan is excellent, but its strategic weakness is rolling politically explosive Social Security and Medicare reforms into the package instead of dealing with them separately, perhaps in a blue-ribbon panel that could build public support for necessary reforms.
Mr. Ryan’s plan is going nowhere in the Democrat-controlled Senate, but it has handed Democrats the entitlement issue they were hoping for to refocus the debate away from the deficits and debt that now threaten to engulf our country.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.
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By Rand Paul
Obama acts as though we no longer have a Constitution