In the simplest terms, the federal government is spending $3 for every $2 it collects and is borrowing the rest. What family budget can possibly survive that formula? The federal government can’t, either.
The budget deficit passed the $1.5 trillion mark this year. That’s equal to the entire 1996 federal budget.
To close the gap this year would require the entire Department of Defense to shut down—two wars and 150 overseas military operations notwithstanding—and also put a stop to all Social Security payments. And do the same thing next year.
Put another way, the budget deficit would be closed if the federal government stopped paying veterans benefits, interest on the debt, Medicare and Medicaid, public school costs, foreign aid, and farm subsidies, and stopped financing space flights, the Environmental Protection Agency, Congress and the White House.
By any measure, the nation is on an unsustainable course that is more perilous the longer it goes unaddressed. Until now, China’s purchase of U.S. debt, the historic run of Social Security surpluses and the recent stock market boom, like giant Band-Aids, have masked the extent of the budget gap. But the Band-Aids are fraying.
The potent dynamics driving the increased spending are hard if not impossible to control. Demographics will continue to drive the cost of Medicare and Medicaid. Interest payments on the exploding federal debt more than double in the next five years to over half a trillion dollars.
Not surprisingly, Washington is so paralyzed that no one—neither the president nor the Congress—will take the political risk to propose the spending cuts and new tax initiatives so obviously necessary to bring the government’s finances into balance. Predictably, a commission was created to study the problem and make specific recommendations for balancing the budget by 2015. That’s a tall order.
If we are truly concerned for the legacy we leave our children and grandchildren, we will recognize the importance of the financial safety net that has improved the quality of life for 75 years, and we will insist on leaving in place a balanced, fair and fiscally sound system.
The commission has the opportunity to make a serious and necessary contribution. But it must keep four markers in mind:
First, these are long-term problems that require long-term solutions, not hastily crafted, panic-provoked options—the commission needs to set aside partisan ideology and seriously address the looming challenges. Second, any attempt to close deficits must include new sources of revenue as well as new attempts to whack, nip, tuck and trim. Third, we need to curb the partisan instinct for hype and high rhetoric and instead try common sense and reason. And fourth, Band-Aids won’t work.
Jim Toedtman is editor and vice president of AARP Bulletin.