This week on Facing the Future, Bob is joined by Bill Gale, Senior Fellow at The Brookings Institution. A well respected expert in the subject of debt and taxes, Gale recently wrote a piece for Brookings called Back to the Future: Can the Government Reduce Its Debt Again? which discussed the future of federal debt management in the United States. Later in the show, David Lerman, writer of CQ Rollcall’s budget newsletter previewed the important appropriations and spending decisions that await Congress when it returns from summer recess in September. Concord Coalition Chief Economist Steve Robinson joined both conversations.
“The debt to GDP ratio is projected to go up to 166% in 30 years,” said Gale, “and that’s if Congress does nothing. If Congress extends the 2017 tax cuts or does other things, that would go even higher. When we look at this situation we can definitely take heart from the fact that we’ve been able to reduce debt in the past, but we should be keenly aware that the things that we did in the past would not be sufficient to change the situation today. The problem is bigger. It’s not caused by war. War is a temporary spending spike. Right now, we’ve got permanent spending built in, you know, Social Security, Medicare, and other forms of spending are growing at the same time. It’s not just a spending issue. I don’t like it when people say that – it misses the fact that revenues are not going up very fast. It’s kind of like asking which side of the scissors does the cutting. It’s the spending path and the revenue path that we need to be concerned about.”
Looking to the past, Gale pointed out that, “There were tax increases in the 1993 budget deal. By the way, that’s the only time in modern history when a party had control of the White House, the Senate, and the House that they voted to reduce the deficit. Normally, when you have a unified government the deficit goes up. And you can think of Kennedy, Bush, Trump, or Biden or Obama in the early years,so that’s kind of notable in itself. And there were tax increases there.”
“I think there are a number of good ideas,” Gale continued, “to raise taxes that would not ‘destroy the economy’ the way the critics like to phrase it. And I think we’re gonna have to test some of those out. Social Security and Medicare are big chunks of spending, and those are very popular government initiatives. They could be trimmed somewhat, maybe means tested somehow, but the idea that we’re going to make major cuts to those forms of spending seems very unlikely. So we’re going to need revenues.”
David Lerman of CQ Rollcall then joined the show. Each year, Congress has the task of passing 12 different appropriations bills that compose the federal discretionary budget. With the deadline for these bills coming up on September 30th, Lerman weighed in on the status of these all-important pieces of legislation, “I think, in a word, I’d say it’s a mess. This has been a really tough, bad year for appropriations in many ways because the politics now are so dicey, so tense, so polarized. With such a slim, slim majority of two to three seats things seem to change by the week. They can barely get anything over the finish line because they’re trying to push out these partisan spending bills, right? Because Republicans are eager to show their fiscal conservative credentials. They’re not working with Democrats on these bills. But that means they have to get every single Republican duck in a row in order to get them passed through the house, and they can’t do it.”
“The Senate itself has passed no [appropriations] bill so far and there’s no reason to think that Chuck Schumer is going to bring up appropriations bills in September just when he knows none of them are going to become law now. There won’t be enough time. Giving up floor time in the Senate is a precious thing. There’s only so many things the Senate can pass because of its cumbersome rules. It is very doubtful to me that Schumer wants to spend countless days taking up one of the 12 appropriations bills that are never going to become law in time. Anyway, he knows this has to be done later in the year in some kind of omnibus. So I don’t think you’re going to see any of the appropriations bills on the Senate floor this year.”
Lerman pointed out the dysfunction of the existing budgeting process. “The last time they passed all these bills on time, I believe, was 1996. So we’re coming on close to 30 years ago. What happens is the government runs on autopilot for months at a time routinely. It hamstrings federal agencies and starting new contracts, right?. Now, does the public care? No, that’s the other problem, because the public doesn’t know this is going on. The public doesn’t feel the effect as long as they avoid a government shutdown and they keep money flowing. The public is never going to know whether they’re operating under a stopgap or under final appropriations bills. It’s too arcane, so they can get away with it because the public won’t notice that. And so that’s the other problem, there’s no push behind them to actually make this work better.”
Hear more on Facing the Future. Concord Coalition Executive Director Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
