Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 22, 1994 TAG: 9404230006
SECTION: EDITORIAL PAGE: A11 EDITION: METRO
SOURCE: By ROBERT L. BIXBY
DATELINE: LENGTH: Long
First consider the magnitude of the problem. Regardless of how much you paid in taxes this year, we as a whole will come up about $228 billion short. Indeed, if we did not count the Social Security trust fund surplus, our 1994 deficit would be closer to $288 billion.
Last year the deficit was $255 billion ($301 billion not including trust-fund surpluses). Next year the Congressional Budget Office estimates the deficit will be $178 billion. Despite the deficit reduction package of last year, this will be about as good as it gets.
The deficit will remain relatively constant for a few years, according to the CBO, but by 1999 we'll be back over $200 billion in annual shortfall. By this time, the total national debt will exceed 6 trillion dollars.
The 10-year outlook is even worse. Without major changes in the way we spend our tax dollars, the deficit by 2004 is projected to be an astounding $365 billion.
What this means, with all due respect to those who wish to declare the deficit crisis over, is that we still have a lot of work to do.
Annual deficits of this size deprive the economy of the savings needed to finance productive investments and a higher standard of living. Further, the more debt we dump onto the future, the more we limit the economic potential and policy choices our children will enjoy.
Here are two questions we need to face. Are we the first generation of Americans to leave behind a diminished nation for our children? And, how can we expect our children to prosper when they will have to spend their earnings paying off our debts and funding our unfunded liabilities?
The answer to the first question is, one hopes, a resounding no, and the answer to the second is that our children will not prosper. In fact, neither will we. The consequences of our debt addition are not some futuristic concern, like global warming or ozone depletion.
Even as Congress debates needed reforms in our health-care and welfare systems, it is constricted by the deficit straightjacket. Legitimate public investments in education, crime control and physical infrastructure are all forced to compete for capped discretionary dollars with fossilized programs that have long outlived, or mutated beyond, their original purpose.
Our national productivity growth has remained relatively stagnant for the past 20 years and so has our standard of living. Meanwhile, net national savings has plummeted to below 3 percent of gross domestic product (down from 10.5 percent in the late 1960s).
These are not theatrical concerns. They are real and they are now. Eliminating the federal budget deficit will not cure all of our problems, but unless we get control of the deficit, it will be impossible to cure any of them. We simply won't have the resources.
So what do we do?
First we have to begin by understanding where the money goes and how it gets spent. Approximately half of all federal spending goes to entitlement programs. These are a diverse group of open-ended, legally binding obligations of the government to pay benefits to all who meet specific criteria. They include these, as well as a host of others:
Social Security $318 billion
Medicare $160 billion
Medicaid $ 86 billion
Civilian retirement $ 40 billion
Military retirement $ 26 billion
Food stamps $ 25 billion
Supplemental Security Income $ 25 billion
Farm price supports $ 11 billion
The key point to remember about these programs is that they are on autopilot. Congress does not review them annually through the appropriations process, and they do not need to compete against discretionary programs for dollars. Furthermore, there are no caps. Spending can rise on these programs regardless of our willingness or ability to pay for them.
When you add up all the entitlement programs and throw in interest payments (now more than 13 percent on the budget), you find that you have accounted for nearly two-thirds of all federal spending. No credible plan to balance the budget can ignore entitlement programs.
This does not mean we have to take a meat ax approach to entitlements. It simply means we have to set priorities and resolve to pay for the programs we want.
Further, entitlement programs do not make up the entire budget. There is much cutting to be done on the discretionary side as well. But we need to be specific. What programs - defense, foreign or domestic - can we eliminate or substantially reduce? Vague caps or across-the-board reductions will not suffice. Again, we have to set priorities and resolve to pay for what we, as a nation, desire.
This takes us back to where we began - taxes. If we cannot summon the political will to set national spending priorities, we will have to either raise taxes substantially or sit back and wait for the economic catastrophe that inevitably will result from a debt that is growing faster than our economy.
Virginians should begin to consider the options. Eliminating the deficit won't be easy and we'll all have to do with less. But what is at stake is the future of our country.
Are we willing to educate ourselves, work with our elected officials and make the tough choices? Or, do we ignore the problem, try to hang on to our own piece of the pie and hope that the crisis hits after we've gone? If the answer isn't obvious, we have bigger problems than debt.
Robert L. Bixby is Virginia state director of The Concord Coalition, a nonpartisan organization dedicated to eliminating the federal budget deficit.
by CNB