- The Washington Times - Thursday, October 23, 2008

COMMENTARY:

America is confounded by an obesity epidemic. It is a dual problem encircling both America’s beltline and Washington’s Beltway. Both stem from a shared failure to align a seemingly simple relationship between intake and output.

In both cases, the obvious situation is obscured by false assumptions that delay the ultimate solution. The result is looming health crisis on one hand and economic crisis on the other.

Americans consume 20 percent more calories today than a generation ago. Our next generation may be America’s first to have a shorter life expectancy than its predecessor. In between lie myriad weight-related problems - diabetes, high blood pressure - and higher health-care costs. These complex problems arise from a simple inability to balance intake to output.

In fact, this simple relation can be very deceptive. At first glance, it appears balance could be achieved with equal ease by either increasing exercise or cutting calories. However, exercise can increase only so much. Exercise’s potential is finite or it will intrude on the necessities of sleep and work. The only realistic answer is to eat less.



Aligning calories to activity seems simple but can be, and in fact increasingly is, difficult for Americans to do. The same is true for Washington in a different way: limiting federal outlays to federal revenues. When the former grows without restraint, government becomes obese and leads to other economic problems.

Like obesity, the federal deficit makes it appear that balance could come from altering either side of the equation. And as in obesity’s case, this is not true. Just as exercise is not infinitely possible, neither is the government’s accumulation of revenue.

Increasingly draining money from the economy is to take it from more productive uses - decreasing productivity. And just as obesity increases other health problems, increasing the nation’s revenue burden is to tax the economic body and decrease its efficient functioning.

The problem on both fronts is the same. We all wish we could eat whatever we want in whatever quantity we wish. Government wishes it could spend indefinitely and indiscriminately. Neither can and retain the health of their respective systems.

Little wonder the temptation is to take the easy answer of fad diets promising to square the circle of eating more and weighing less. Just as gimmicks purport to easily cure obesity - yet Americans continue to get heavier - there are budgetary “enablers” too. In the budget world, they are called “baselines.”

Baselines are simply projections of future budget circumstances. Their flaw at the federal level is they build in the problem they should correct: spending. Federal baselines inflate their spending projections, not just by economic inflation, but by what it would take to run spending programs at their current levels. The effect is automatic increases to spending, with any decrease from this projection deemed “a cut” - even if it is still more than last year’s amount. Using similar logic, a person weighing 200 pounds who gained 20 pounds in a year, would be deemed to have lost 10 pounds, if he only gained 12 pounds next year!

Even more blatant is the unequal treatment of spending and tax. Federal baselines treat so-called mandatory programs - auto-pilot federal spending programs - as continuing, even if they expire in law. In contrast, they treat tax cuts expiring in law (the 2001 and 2003 cuts for example), as ending. This differential treatment means continuing spending programs does not count as increased spending, but maintaining tax cuts counts as “lost revenue.”

Federal baselines encourage increased spending by increasing it themselves. Just as bad, they treat spending and taxes as equal solutions to the deficit problem, despite their vastly different impacts on it. Comparing their deficit reduction roles, taxes are overperforming and spending is underperforming. Taxes amounted to 18.8 percent of gross domestic product (GDP) in 2007, versus a 17.9 percent average over the last 60 years; contrastingly, 2007 spending was 20 percent of GDP, while its 60-year average was 19.6 percent.

The Congressional Budget Office’s long-term budget projections make clear, this discrepancy will only increase as Baby Boomers retire and trigger an entitlement spending boom. Spending is both the current and future threat.

While we recognize the nation’s dietary trends are out of whack, we seem oblivious to Washington’s budgetary standards. Both have “enablers” - phony fad diets and federal baselines - that do more harm than good. Both encourage avoiding the self-restraint to control the bad habits of overeating and overspending.

The time is long past when we could fool ourselves about our nation’s weight problem or our government’s girth. If we are to cure our budget bloat, the first thing we need to put down is our baselines.

J.T. Young served in the Treasury Department and the Office of Management and Budget 2001-04 and as a congressional staff member 1987-2000.

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