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Budget Reform Problems
Inherent flaws in today’s congressional budget process, along with
rising
entitlement
costs represent one of the largest contributing factors to rising
deficits in the United States. Each year, the President’s budget is
formulated in the executive branch and submitted to congress. Congress
then proceeds to modify the President’s proposal as it works towards a
budget
resolution. While
this resolution is not binding, it remains an important outline of the
nation’s spending goals for the year. Once the budget resolution is
passed, the House and Senate
appropriations committees
vote to authorize spending in their respective areas. Such
discretionary
spending represents only a fraction of the yearly budget.
NOTE: This projection assumes that
revenues increase gradually to 18.3 percent of GDP, the average level of
the past 30 years. Source- Congressional Budget Office20
Entitlement spending, on the other hand, represents a far
larger chunk of the government’s total yearly expenditures. Spending on
entitlements like Medicare, Medicaid, and Social Security, automatically
increases each year because of changing demographics in the United
States. While discretionary spending is debated at length in
appropriations committee meeting, entitlement spending remains on
autopilot.21 In the next two decades, as Baby-Boomers begin
to retire, the population collecting Social Security and Medicare
benefits is expected to skyrocket, and with them the cost of providing
each and every eligible citizen with the required entitlement outlays.
Congress has attempted a varied of ways to control its rampant spending
habits in the past. Perhaps the most notable of techniques—and the most
successful—was the Budget Enforcement Act of the early nineties that
instituted a Pay-As-You-Go system or simply PAYGO. This system mandated
that every tax decrease proposed in Congress be followed by a spending
decrease, and vice versa. In other words, every decrease in income
revenues would have to be paid for by a decrease in government spending,
and every increase in government spending would need to be accompanied
by a tax hike.
In the nineties, it was a strong bipartisan consensus
surrounding the necessity for actions that fueled the passing of the
BEA. Such widespread popular support lead to not only the passing of the
BEA and the implementation of the PAYGO scheme but also a strict
adherence to its rules, the result: a balanced federal budget.22
Unfortunately, the current politician polarization that has Washington
politics in a stranglehold, appear to be preventing any sort of
bi-partisan agreement at the cost of the nation’s economic welfare.
Without popular support, the need for budget reform will linger in the
back pages of Congress’s do-to list.
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