Courage severely needed in Congress to enact change
Before anyone gets too enthusiastic because Congress avoided yet another default in the federal budget and claims that somehow that was an indication that bipartisan action works, consider the facts.
The budget “compromise” and vote recently were addressing the budget that should have been passed six months ago, and our Congress has not passed a real federal budget, one of its primary tasks, for a long time.
Again, a Republican speaker of the House of Representatives faces a possible revolt and discharge because he did the minimum required of the government.
The budget, as passed, has a $2 trillion deficit. Thirty years ago, the entire federal national debt was $2 trillion!
At a recent meeting of the Concord Coalition New Hampshire advisory board, the sad facts of federal fiscal policy were laid out clearly. This meeting followed a presentation at the UNH Rudman Center of a Peterson Lecture.
Bob Bixby, the executive director of the Concord Coalition, reported the dire facts. His report was that “we are as close to a death spiral as I can recall” in connection with federal budgeting. In the present budget as passed, there is a major item of interest on the national debt of $663 billion. When interest rates were close to zero, deficit spending seemed to be an easy answer to whatever politicians thought necessary.
This was true under Republicans and Democrats, although it seemed a little more hypocritical under Republicans, who at least claim to value fiscal restraint. Today, remaining funds appropriated during COVID prop up local governments and business and nonprofits that have to plan for the expiration of that spending spree, and are worried about it.
Why are we in this mess? An analysis of spending in the federal budget shows what makes up the spending. The interest on the debt is about 10% of the total spending, the total of which is $6.4 trillion. Discretionary spending, that which is not mandated by programs set in law, make up 27% of the budget.
Of that, 12% is defense spending.
Mandatory spending, required by law, makes up 63% of the budget, and that is made up of health care, Social Security and other spending. Health care spending rises as the population ages, as does Social Security.
On the other side of the ledger is revenue.
Revenue is about $4.439 trillion (which is why there is a $2 trillion deficit). That comes from corporate taxes (10%), payroll taxes (32%), and individual income taxes (52%). Also, there are miscellaneous federal taxes that make up 6% of the revenue.
What does this indicate? It does not take rocket science to realize that either spending has to be reduced, or revenue has to be increased, or both, to balance the budget and start reducing the debt. Trump’s irresponsible tax reductions are scheduled to end at the end of 2025, which may help some, although they might not be the right adjustments, and spineless politicians might not let them expire. Proposals to increase taxes on billionaires and corporations, either by adjusting rates or eliminating deductions, have been made by President Biden and others. At the same time, while it is a no-brainer that Social Security and health care spending should be examined on a bipartisan basis, politicians in both parties pledge not to “take your Social Security away.” The problem with this nonsense is that no one wants to take anyone who needs Social Security’s benefits away, but rather to be sure they are guaranteed.
That means an examination of retirement ages, raising the amount of income taxed for Social Security, and taxability or reduction of benefits for those with high retirement income.
None of these things would hurt those who need Social Security, but instead would guarantee their benefits, but politicians grandstand instead of working on solutions. Former New Jersey Gov. Christie and others have made responsible proposals about how this could be done, and it should be.
Thirty years ago, a commission headed by John Kerry and former Sen. John Danforth issued a report on what had to be done to solve the budget problem. In the report, they indicated that the nation needed to increase savings, control entitlements, balance the budget and address Social Security.
NH Sen. Warren Rudman, along with Texas Sen. Philip Gramm and South Carolina Sen. Fritz Hollings, authored the Gramm-Rudman-Hollings Budget Act in the late 1980s.
Termed “a bad idea whose time has come,” by Senator Rudman, the act was aimed at forcing budget balancing. Sadly, it was eviscerated and ignored thereafter.
What is the answer? Limit spending to what can be addressed by revenue sources, and, most importantly, raise revenue to provide the resources to pay for it.
What is the missing element? Courage, by Congress. We should demand it, rather than listening to the nonsense politicians are peddling.
Brad Cook is a Manchester attorney. The views expressed in this column are his own. He can be reached at bradfordcook01@gmail.com.
