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Real Debate Needed on Discretionary Spending

Getting our nation’s debt situation under control will require us to make tough choices.  Make no mistake about it – Washington, like the rest of the country, will need to take a hard look in the mirror, set priorities, and tighten its belt. 

There is no one silver bullet anywhere in the economy to get U.S. debt under control.  Even large scale changes to our health care system, the largest driver of our debt, cannot fix America’s fiscal imbalance alone.  Any real solution must include a wide variety of cuts to both domestic and defense discretionary spending, cost-saving reforms of Medicare, Medicaid, and Social Security, and new revenues.

While constraining domestic, non-defense discretionary (NDD) spending must be a part of this process, the Republican Study Committee’s (RSC) recent proposal goes unrealistically far by cutting this spending to the nominal 2006 level, and then holding it there through 2021. This cut amounts to a 42 percent reduction below last year’s funding level (adjusted only for inflation), and leaves NDD spending in 2021 at 44 percent below its lowest level in the last thirty years as a percentage of the economy. By providing no adjustments for inflation or population growth, the RSC proposal will require very large cuts to almost every single program and service covered in the NDD budget: from FDA food safety inspectors and DHS border security to teachers in the classroom and cops on the street. Members of Congress can choose to protect a couple of their most cherished programs within this freeze, but then the remaining cuts have to be even more draconian than a 42 percent reduction.

Politicians often speak of the need to cut waste, fraud and abuse and foreign aid, but even getting rid of all such spending would barely make a dent in the RSC goal. Even the RSC’s laundry list of discretionary cuts doesn’t get you anywhere close. There is a fundamental disconnect between the vague rhetoric to cut NDD spending to the bone and the list of programs actually funded through NDD spending, many of which benefit almost every American. The RSC deserves some credit for naming some specific programs that they would cut. To actually achieve the 42 percent reduction that they proposed, however, the government would have to significantly curtail its efforts to fix our crumbling infrastructure, provide money for medical research, make sure that our food and drugs are safe, and educate our children.

When domestic discretionary cuts are mentioned in the context of reining in the U.S. debt, we must acknowledge the reality that this type of spending has remained relatively constant as a percentage of the economy over the past thirty years. While this section of the budget must contribute to the solution, it is only a small part of the problem. Moreover, the entire non-security budget is less than $500 billion today (or approximately one-third of the deficit projected for FY 2011), and even if the government eliminated all such spending tomorrow, the U.S. would still have unsustainable levels of debt, and would never achieve a single balanced budget without further policy changes. That being said, the NDD budget nevertheless does offer the potential for budget savings by reducing duplicative and outmoded programs, while ensuring that spending goes to the most needed and effective ones.

Both the Domenici-Rivlin Debt Reduction Task Force plan to freeze non-defense discretionary spending for the next four years at 2011 nominal levels, and President’s Obama’s State of the Union proposal to freeze non-security spending for the next five years do just that, and will return NDD spending to its lowest level as a percentage of the economy since Dwight Eisenhower was president. And despite arguments to the contrary, neither of these proposals freeze in the inflated stimulus spending levels.

A serious dialogue about discretionary spending can only happen if both parties are talking, and although the RSC plan goes too far, they have a plan that lists a number of specific cuts. On the other hand, Democrats in Congress have stayed out of this debate. Hopefully President Obama’s call to freeze non-security spending for the next five years and find some savings in the Defense department will help jumpstart a necessary bipartisan discussion.

Laura Hatalsky contributed to this post.

2011-01-31 00:00:00

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