The federal government faces serious fiscal challenges. We need serious politicians.
The can our unserious politicians have been kicking down the road is fast running out of road.
With the recent slapdash presidential budget proposal for next fiscal year, Donald Trump and his administration have abandoned even pretending to pretend to care about the sorry state of the federal government’s finances.
The president and Congress have rarely adhered to the timeline provided by the Budget Act of 1974. However, it offers a useful reference point for what a responsible budget process would look like.
That process begins with the president’s proposed budget, which is supposed to be presented by the first Monday in February. Trump didn’t submit his until April 3, a full two months late. And it wasn’t a complete budget.
The presidential budget proposal always includes a ten-year projection for all revenues and all expenditures. The 2027 Trump proposal includes a ten-year projection for revenues, but only a partial projection for expenditures. There is no overall presentation of what the federal government’s finances would look like if all of Trump’s recommendations were adopted.
On expenditures, there is a ten-year projection only for what is known as discretionary spending, the defense budget and domestic spending that has to be annually appropriated. Excluded is formula spending that doesn’t require an annual vote from Congress, most significantly Social Security and Medicare. It also excludes interest on the national debt.
Discretionary spending, however, only accounts for about a quarter of overall spending. And the fastest growing federal expenses are precisely for Social Security, Medicare, and interest on the national debt.
It’s hard to fathom why the Trump administration abandoned a holistic presentation of the federal government’s finances. The only thing I can come up with is a political decision not to produce something themselves illustrating how serious and growing the debt burden would be, even if all of Trump’s recommendations were adopted. Stated alternatively, how unserious the administration is about doing anything to change a dangerous trajectory.
Of course, there is enough in Trump’s budget proposal for others to offer the holistic presentation missing from the document, and the useful and resourceful Committee for a Responsible Federal Budget had done just that.
The Trump budget includes some unrealistic projections for economic and revenue growth over the next decade: annual real GDP growth of around 3%, a decade of unemployment at less than 4%, interest on the national debt also consistently below 4%, and inflation steady at just a tad above 2%. None of those conditions currently exist. The odds of them locking in quickly and holding steady for an entire decade are minuscule.
According to the committee’s calculation, if these minuscule odds panned out, the Trump budget would show a modest improvement in federal government debt as a percentage of GDP over time. Substituting the more realistic economic growth and revenue projections of the Congressional Budget Office, the Trump budget would not materially change the current debt trajectory, in which federal debt as a percentage of GDP continues to rise alarmingly and interest payments eat up a larger and larger share of annual revenues.
As economist Herbert Stein observed: “If something cannot go on forever, it will stop.” The federal government cannot borrow over a quarter of every dollar it spends forever. Managing the stop, rather than waiting for circumstances to impose one, should be the top priority of the president and Congress. Instead, it is not on the policy agenda of either branch or either party.
Under the Budget Act, Congress is supposed to adopt a budget resolution for FY 2027, which begins in October, by April 15, just a week from now, setting top-line revenue and appropriations figures. By the end of June, the House is supposed to pass all appropriations bills to flesh out the budget resolution. That would leave three months for the Senate to pass any changes it wants and for the two branches to reconcile any differences well before the start of the new fiscal year.
That’s what a responsible political leadership would be doing. Needless to say, none of that is going to happen. Instead, Congress and the president are still stumbling around trying to finalize spending authority for the Department of Homeland Security for this fiscal year, which is more than half over. There is no difference between the parties over how much to spend. Instead, there is disagreement over imposing restrictions on Trump’s mass deportation tactics.
Since the immigration enforcement agencies already have plenty of funding to get through the year, from a previous reconciliation bill, the obvious compromise has been to fund everything else and continue to fight about just the immigration enforcement agencies. That would not jeopardize the immediate continuation of Trump’s deportation efforts, while Democrats could continue to argue for restrictions on future funding.
Yet the department has been shut down for close to two months, with employees in many vital agencies working without pay, while the politicians fumbled their way to the obvious compromise. And after fumbling into it, the House promptly went on a two-week recess rather than convening to pass it.
These are not serious people. At least, they are not serious about governing.
The Social Security and Medicare hospitalization trust funds are projected to be depleted in just seven years. The president and Congress have monumental decisions to make about taxes and spending. The can they have been kicking down the road is fast running out of road.
The pain-free narratives of both parties are hollow and false. Difficult trade-offs and choices are unavoidable.
If American voters want these decisions made in a timely, thoughtful, and deliberative manner, they need to start electing a different kind of politician, ones who are committed to and skilled at governing.
The current president can’t offer an honest budget. The current Congress, irrespective of which party is in charge, can’t pass a budget in a timely and responsible way. With what the country faces in the intermediate future, that’s not good enough.
Reach Robb at robtrobb@gmail.com.