What to do about the Federal Government's Overspending

Op-Ed

This column was first published by the KPC Media Group in the News-Sun (Noble & LaGrange Counties), the Evening Star (DeKalb County), and the Herald-Republican (Steuben County).

Everyone knows that the federal government is spending too much of our money. Indeed, each day the U.S. Government descends deeper into debt. Approaching $10 trillion, the national debt represents an incomprehensibly-enormous number.

We also know that the eventual consequences of profligate government spending are not good: either our children and grandchildren will face crushing tax hikes, or they'll face massive cuts in services. Either way, they're the ones who will be saddled with the problem that we've created or worsened.

How did we get here? And how can we fix it?

While much media attention has been focused on congressional earmarks, this type of spending represents a comparatively-small part of the problem. (For the current fiscal year, the federal government will spend $2.9 trillion. The budget authority for earmarks is $29 billion.) More than anything, earmark abuses are symbolic of the larger spending problem.

In order to understand the nature of the problem we face, we have to understand how the federal government spends taxpayers' money.

There are two key types of federal spending—discretionary spending and entitlement spending—and they're very different. Understanding this difference is essential to understanding (and fixing) the federal government's spending problem.

Discretionary spending is allocated by Congress through annual appropriations acts that fund the many departments and agencies of the federal government. For fiscal year 2008, Congress and the President approved $1.092 trillion in discretionary spending (which covers defense and education programs, among many, many others).

Entitlement spending, on the other hand, is a binding obligation set automatically by the number of people who are legally-eligible for (or entitled to) certain federal programs. Specific entitlement spending levels, therefore, are not set each year by Congress. Encompassing mandatory spending, entitlement programs include Social Security, Medicare, Medicaid, supplemental security income (SSI), and unemployment insurance, among others. Entitlement spending for the current fiscal year is $1.577 trillion.

I make this distinction not to absolve Congress and the President of responsibility for entitlement spending. The two branches of government have the power to change the automatic spending level of entitlement programs. Indeed, they will need to act to fix the problem. I point it out, rather, to show how the federal government can keep on growing because of obligations it made years ago, even without passing additional spending bills.

Mandatory spending has grown tremendously over the last several decades. In 1962, mandatory spending was less than a third of all federal spending. In the current fiscal year, however, mandatory spending comprises more than half of total federal spending. (Net interest payments account for an additional 8.1 percent or $234 billion.) Just three federal programs—Social Security, Medicare and the federal share of Medicaid—now comprise over 40 percent of federal spending.

If the current trend continues—and we allow mandatory spending to continue its unchecked growth—the retirement of the baby boomers and the rising cost of health care could bankrupt the system.

Real reductions in federal spending, therefore, require serious reform of entitlement programs.

In their recent budget, however, the Democrat-controlled House of Representatives proposed no real reform.

Why? Because meaningful entitlement reform—affecting Social Security and Medicare, two popular programs—takes political courage. It would easily lend itself to demagoguery by the other party.

Current inaction, however, means that each year we end up with the status quo (i.e., nothing being done), and instead pile up more and more obligations and debt.

Without real reform, that's the sad legacy that we'll be leaving for our children and grandchildren.

Source