The spending bill debate isn’t about numbers — it’s about our future
By David M. Walker – October 21, 2021
Now that Congress has passed a temporary continuing resolution and debt ceiling increase, the resolution of several major legislative proposals later this year will have a significant impact on America and Americans for many years to come.
While a lot of attention has been focused on the price tag of the bipartisan infrastructure bill (est. $1.2 trillion over 10 years) and the Democrat’s social spending (“human infrastructure”) proposals (est. $3.5+ trillion over 10 years), the real debate concerning these bills should be on what type of America do we want, what can we afford and what steps do we need to take to create a better future.
The bipartisan “traditional” infrastructure bill has already passed the Senate with 69 votes. It represents a temporary increase in discretionary spending designed to address the need to repair and revitalize our deteriorating critical infrastructure. If intelligently designed and effectively implemented, it can help to promote additional economic growth and job creation. Nonetheless, given the current financial position of the federal government, it should be paid for.
The Democrats proposed “human infrastructure” bill would significantly grow the size of the federal government, further increase “mandatory spending,” and increase the number of Americans who are dependent on federal government programs. Despite its budget scoring “cliff” provisions, its new government benefit programs are intended to be permanent. Its proposed dramatic expansion of “entitlement” programs does not target the benefits to the poor and near-poor, does not include a work-related requirement, and would cover illegal immigrants. More importantly, it would move our country further away from many of our nation’s founding principles that helped to make us great. Principles like a limited but effective federal government, individual liberty and opportunity, personal responsibility and accountability, rule of law, fiscal responsibility and inter-generational equity and stewardship.
If enacted into law, the “human infrastructure” legislation would likely result in slower economic growth, higher inflation and more illegal immigration over time. These three factors are already a problem and we must not make them worse.
The Democrats assert they will “pay for” this dramatic expansion of government, but that is not the right fiscal goal.
According to the U.S. Government’s Fiscal 2020 consolidated financial statements, the federal government was in a $104 trillion financial hole as of Sept. 30, 2020. This number represents the total federal liabilities and the present value of unfunded social insurance promises for the next 75 years, as of that date, and the hole is growing at a faster rate than expected recurring economic growth. Therefore, given this fact and our high and growing debt/GDP levels, paying for additional expansions of government is an inappropriate and unacceptable goal. We need to take actions to reduce the percentage of mandatory spending in the budget, make sure that we address our huge unfunded promises associated with Social Security, Medicare and other current federal programs, and take needed steps to start climbing out of our growing financial sinkhole.
Common sense says that we should take steps to ensure the financial integrity and sustainability of current federal programs before expanding current programs or creating new ones. This is especially important since COVID-19 accelerated the year of expected exhaustion for the Medicare Hospital Insurance Trust Fund and the combined Social Security Trust Fund to 2026 and 2034, respectively. These dates are likely to accelerate further due to slower economic growth and higher inflation.
And what about the debt ceiling? Unfortunately, it is ineffective and has become a political posturing facilitator rather than a fiscal re-examination motivator. It needs to be repealed and replaced with a mechanism that forces a re-prioritization and restructuring of current federal tax and spending policies to achieve a specified fiscal objective (e.g., debt to GDP ratio) by a date certain. In the interim, it should not be suspended but should be raised to the level needed to cover CBO’s latest projected deficits under current law until February 2023.
In order to put our finances in order, we need a new statutory and trans-partisan Fiscal Sustainability Commission to prepare the way and set the table for tough choices. This commission would actively engage the American people and make a range of recommendations to reduce public debt to GDP ratio to a reasonable and sustainable level by a stated year and stabilize it thereafter. The commission’s design and operations should learn the lessons from the prior “Simpson-Bowles Commission” and be guaranteed a vote in Congress. It should also recommend one or more alternatives to the current failed debt ceiling. The creation of such a commission should be authorized this year either as part of either the next debt ceiling legislation or the budget reconciliation process.
America is a great nation, but we face many challenges that threaten our collective future. How the above issues are addressed by Congress and the president later this year will have a major impact on whether our collective future will be better than our past.
Hon. David M. Walker is a Defense Business Board member. He served as U.S. comptroller general from 1998-2008.