Friday, December 11, 2009

The Spending Just Doesn't Quit


Congressional leadership has unveiled an a $446.8 billion “minibus” that will cover six annual appropriations bills, leaving only the defense bill to pass separately. Assuming these bills pass, discretionary spending will have jumped by 8 percent for the third consecutive year since the Democrats took control of Congress in 2007. In those three years, regular discretionary spending has jumped 25 percent, from $873 billion to $1,090 billion. But that’s not all. The recent stimulus bill provided an additional $311 billion in “emergency” discretionary spending. Altogether, the last three Congressional Democratic budgets have spent $561 billion more in discretionary spending than if they had limited growth to the baseline inflation rate.

Non-defense discretionary programs—which have received most of the increases—have not exactly been starved in the past, either. From 2001 through 2008, these outlays grew 32 percent faster than inflation, due in part to large increases for education (31 percent), health research (30 percent), and international affairs (47 percent). Clearly, these programs do not need even more budget increases. Yet rather than ask federal agencies to join the American people in some recessionary belt-tightening, Congress gave these programs an 8 percent increase in FY 2009, and is in the process of adding another 8 percent for FY 2010 —not even counting the historic $311 billion in additional “stimulus” funding for these programs.

This is not the budgeting of a Congress even minimally serious about the budget deficit. And each large annual discretionary spending increase becomes part of the permanent discretionary spending baseline. In fact, the steep increases over the past three years have added $1.7 trillion to the 2011-2020 discretionary spending baseline – nearly $1,500 per household annually.

Unfortunately, the President’s budget agenda would continue this spending spree indefinitely. Federal spending (which has remained around 20 percent of GDP since the 1950s), would surpass 28 percent of GDP by 2019. Federal spending per household would rise from $25,000 per household in 2008 to more than $37,000 per household by 2019. This represents an enormous, permanent increase in the size of government.

This spending would drive a permanent, unprecedented increase in the national debt. After borrowing just under $6 trillion from 1789 through 2008 (plus nearly $2 trillion in 2009), Washington would borrow $13 trillion over the next decade—nearly $100,000 for every household. By 2019, annual budget deficits would approach $2 trillion and push the public debt to nearly 100 percent of GDP. Merely paying the interest on this debt would soon cost taxpayers $1 trillion annually, and spending and deficits would continue rise.

If a recession and $1.4 trillion budget deficits are not enough to persuade Congress to pare back the 8 percent growth rate in discretionary spending, what will it take? It’s business-as-usual in Washington.

I will be very interested to see how many Republicans sign on to this ridiculous spending bill. If they had any sanity and sense of responsibility, not a one of them would support it. We'll know soon enough...

There's my two cents.

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