Where’s A Budget-Cutter To Turn?

Congress has passed, and President Trump has signed, a $1.3 trillion interim federal spending bill.

That’s $1.3 trillion, with a “t.”  And that’s interim, in that the colossal amount of spending will only fund our out-of-control federal government until September 30, when another spending bill will be needed.

8125974243_f6ce8726f2_bPresident Trump, who briefly raised the threat of a veto before putting his John Hancock on the bill, says he’ll never sign another bill like this one.  I’m calling BS on that one.  The reality is that, for people like me who think our country has an enormous spending problem that eventually will be our downfall, there’s nowhere to turn.  The Democrats never met a domestic spending program that they didn’t want to increase.  The Republicans, who posture about deficit responsibility, have shown that they are too craven, and too interested in avoiding ruffling any feathers that might interfere with their reelection prospects, to tackle the tough job of actually reducing, and in some instances eliminating, federal programs that really aren’t necessary.  And President Trump is a deal-maker who will gladly rationalize just about anything, just as he did with this latest monstrosity by saying that the increase in military spending makes all of the rest of the irresponsibility palatable.

There are no longer any institutional forces that will restrain federal spending or cause our political class to act like statesmen and take the long-term, good-for-the-country view.  There’s no appetite whatsoever for careful judgment, for systematic review of whether programs are actually working, and for making the thoughtful choices that are a crucial part of living within your means.  Once again, we’re seeing concrete evidence that the current class of political leaders are the worst political leaders in history.

We’re on the cash-paved road to failure, and spending ourselves into oblivion, and nobody seems to really care about doing anything about it.

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The Ever-Upward Irresponsible Trend

Am I missing something?  Nobody seems to be paying any attention to federal spending and deficits anymore.

stacks-of-moneyThe Republicans, who used to be the preachers of deficit reduction, balanced budgets, and fiscal discipline, are much too busy trying to distance themselves from President Trump to do much of anything about anything, much less something detail-oriented and difficult, like tackling federal spending.  And the Democrats never seemed to have much appetite for actually considering whether legacy federal programs make sense in the current world, or are performing as they were intended, or are actually having a positive impact from a cost-benefit standpoint.  Expecting Congress to actually pass a budget seems to be hopelessly passe, and continuing to spend more, more, more seems to be the default approach.  And, given the kinds of deficits we’re racking up, and the experience of Puerto Rico, and Illinois, and other states that haven’t paid attention to basic economic realities, “default” seems like an apt word.

In case you’re interested, June 2017 was the first month in history where the American federal government spent more than $400 billion.  You can see the number — $428.8 billion — on page 2, in the “outlays” column, of this dry document called the monthly report of revenues and outlays, issued by the Treasury Department.   And here’s an interesting statistic, for comparison’s sake:  according to this report from the Congressional Budget Office, the amount of federal government outlays for the entire year of 1976 did not even reach $400 billion.  But ever since that time, it’s been an ever upward trend, and now we’ve reach the point where the federal government spends more in a single month than it spent in an entire year only 40 years ago.

You’d think that somewhere, someone in Congress would be up in arms about what is obviously an alarming and unsustainable trend.  You’d think someone, somewhere would be waving that dry Treasury report around and asking why the spending by the list of the government agencies set forth in small type later in the report needs to be ever increasing, and demanding that those agencies tighten their belts or justify their existence.  You’d think that someone, somewhere, would be glancing uneasily at Puerto Rico and Illinois, looking at the federal trends, and deciding that we need to do something to curb our profligate ways before we’re irretrievably on the road to economic perdition and financial ruin.

Of course, you’d be wrong on that.  It’s much easier to just react to the latest Trump Administration dust-up and let things slide.  The only worrying seems to be done by those of us out in the real world whose practical experiences with household budgets and controlling family spending makes us grind our teeth at the amazing irresponsibility of our elected representatives.

A federal government that spends more than $400 billion in a single month!  And nobody is talking about it.

A Giant Insurance Company With An Army

With Tax Day now behind us, it’s worth looking, again, at where our tax dollars come from and also how our tax dollars are spent.  The Brown Bear helpfully sent me an article reporting on the Taxpayer Receipt prepared by a nonpartisan group called the Committee for a Responsible Federal Budget.  While the original article is behind the Wall Street Journal website paywall, a Fox Business reprint of the article’s text is available on-line.

ss-recipientThe Taxpayer Receipt shows how every $100 in federal taxes was spent in 2016 — and, to give a sense of the trend lines, how that same $100 was spent in 2011, too.  The result supports the conclusion memorably expressed by the line I’ve used as the headline for this piece:  the United States has become a “giant insurance company with an army.”

Why?  Because half of all federal spending goes to Social Security, Medicare, Medicaid, and health programs, and that number is growing, with Social Security spending up 17% since 2011, Medicare up 15.1%, and Medicaid up 25.4%.  Social Security gets by far the biggest piece of the federal spending pie, receiving $23.61 of every $100 in tax dollars.  Medicare places second, with $15.26.

And what about that army?  National defense comes in third, with $15.24 of every $100 in taxes paid.  That amount dropped 22.3% from 2011 to 2016, incidentally.

On the spending side, the lesson from these numbers is clear:  we’ve become an enormous social welfare state, with benefits continuing to expand.  As the percentage increases from 2011 to 2016 indicate, the growing spending on such programs is crowding out our ability to fund other programs, like transportation infrastructure, federal parks, space exploration, and every other federal initiative you can name.  And the increased spending isn’t helping the nagging problem of Social Security solvency, either.  The program is underfunded by at least 20 percent, and under current projections the Social Security Trust Fund (not exactly an accurate moniker) will run out of money in 17 years.

Oh, and here’s another interesting data point — fully $6.25 of every $100 in tax revenue goes to pay interest on the national debt.  That number is growing, too.

On the tax generation side, the individual income tax provided 47% of the $100, with payroll taxes producing 34%, corporate income taxes 9%, and customs duties and excise taxes another 9%.

Now, get back to work!

Bald-Faced Waste

Imagine, for a moment, that you are a bureaucrat at the National Institutes of Health charged with making decisions about spending the NIH budget.

One of your subordinates comes to you with a proposal for the NIH to spend $22,500, over two fiscal years, to fund the 9th World Congress for Hair Research.  The subordinate notes that the theme of this year’s World Congress, sponsored by the North American Hair Research Society — which will be held at the “luxurious InterContinental Miami” hotel in Miami, Florida — is Reflect, Rejuvenate, and Regenerate.  He says the Congress will bring together “hair biologists, dermatologists, cosmetic scientists and hair transplantation surgeons” to “present new research, share experiences, and discuss new directions for the advancement of knowledge in hair growth, hair and scalp disease, and clinical care” and is sponsored by the likes of Women’s Rogaine, Procter & Gamble, HairMax, Theradome, L’Oreal, Aveda, and the International Society of Hair Restoration Surgery.

baldheadsDo you: (a) tell the subordinate that his proposal is a very funny joke, and share a good laugh at the outlandish idea of federal tax dollars being used to help put on a “luxurious” conference about baldness and hair restoration surgery, (b) gently but firmly tell the subordinate that baldness and hair implant surgery aren’t the kind of serious health concerns that require the attention or support of the National Institutes of Health, or (c) rubber-stamp the proposal because it’s only for $22,500 out of the multi-million dollar NIH budget and note that the session about “Robotic Hair Transplants” looks like it should be interesting.

If you picked (c), you have a future as a federal bureaucrat.

In the grand scheme of trillion-dollar federal budget and trillion-dollar deficits, a $22,500 payment toward the 9th World Congress for Hair Research — which is going on now, thanks in part to your tax dollars — is just a drop of Rogaine in the bucket.  This is about principle, however.  Either the people who make decisions about how federal tax dollars are spent are zealous guardians of the public fisc, or they aren’t.  And while some men and women may fret about losing their hair, there simply is no justification for federal support for a hair-care conference that already is amply supported by large corporate sponsors peddling hair-care products and hair restoration and regeneration treatments and techniques.

Kudos to Senator Rand Paul — whose tousled coiffure is at the other end of the hair spectrum — for calling attention to this little example of spending silliness.  You can see the NIH information about the funding for the 9th World Congress here and here, and the Congress website is here.

Our reckless federal spending has fallen off the political radar screen, both because we’ve become hardened to enormous federal budget deficits and because other issues have come to the forefront.  At some point, though, our federal government’s inability to control its budget and to resist obviously unnecessary spending will have terrible consequences.  And that’s the bald-faced truth.

The Latest Government Rating System

The federal government has announced that it plans to “rate” America’s colleges and universities.  The New York Times story linked above describes the ratings push as “a radical new effort by the federal government to hold America’s 7,000 colleges and universities accountable by injecting the executive branch into the business of helping prospective students weigh collegiate pros and cons.”

IMG_0747The underlying concept is that colleges and universities receive $150 billion in federal loans and grants, so the federal government should determine whether the schools are “worth it.”  The proposed rating system would apparently be based on how many students graduate, how much debt they accumulate during their college years, and how much money they make after they graduate, among other factors. The federal rating would compete with the college guides, like that produced by U.S. News and World Report, that are all too familiar to the parents of a college-bound high school student.

College administrators are reacting with horror to the idea.  In some respects, it’s hard not to feel a certain schadenfreude when you read their outright dismissal of the idea.  For years our institutions of higher learning have been relentlessly raising their tuition and fees and administrator salaries, blithely rejecting thousands of applicants, and happily operating in their own, comfortable sphere of almost complete autonomy.  Now they’re the ones who will be judged, and they don’t like it.

But the college presidents have a point.  One Department of Education official said the rating system would be a cinch, like “rating a blender.”  Sounds like the same unfounded  bureaucratic arrogance that led to the disastrous roll-out of the healthcare.gov website, doesn’t it?  And speaking as someone who went to a land-grant school for college and a private school for a law degree, and was the parent of children who have gone to small and medium-sized private schools and a state school for college and master’s programs, I have zero confidence in the judgment of anyone who thinks that rating schools is even remotely comparable to rating an appliance.  There are far too many variables and differences, and focusing on financial issues — like how much graduates are paid — inevitably gives short shrift to the idea of getting a well-rounded liberal arts education.

More fundamentally, I am royally tired of the federal government injecting itself into every facet of American life.  The process is always the same — first the government provides money, then it says it needs to establish oversight to ensure that the money is being spent wisely. (Of course, there’s never any reconsideration of the idea of the federal government spending the money in the first place.)  We know from years of experience that if the Bureau of Federal Higher Education Rating is created, it will immediately become another calcified government program that can never be cut or terminated.

We don’t need President Obama or the federal bureaucracy dreaming up new ways to regulate and new administrative positions that need to be filled, we need them to focus on doing a better job of running the programs that already exist and figuring out how to run them more efficiently — and determining whether they are truly needed at all.  I’d give the notion of establishing a federal college rating system an “F.”

In Defense, Recognizing “Fiscal Reality”; In Domestic Spending, Not So Much

Yesterday Defense Secretary Chuck Hagel unveiled plans to reduce the size of the U.S. military. The plans were motivated, Hagel said, by the need to recognize “the reality of the magnitude of our fiscal challenges.”

Hagel’s plan includes cutting the size of active duty forces, changing pay structures, benefits, and housing allowances, eliminating certain weapons programs, and potentially closing military bases. Obviously, the proposals will need to be carefully considered to ensure that we are fair to the women and men who have served so capably in our military, but I have no problem with the concept of reducing the footprint of our military and modifying its focus. The world has changed since our forces were actively fighting in Iraq and Afghanistan; those changes inevitably will affect our defense planning. If bases or weapons programs are no longer needed, they should be ended, and our focus should be concentrated on the weapons programs and forces we truly need to respond to the threats posed by the current, fractured, dangerous world.

I am struck, however, by the difference between our approach to defense spending and our approach to other parts of the federal budget. The “reality of the magnitude of our fiscal challenges” obviously doesn’t exist just with respect to the military budget, it exists with respect to every dollar spent by the federal government. Where is the careful evaluation of whether other federal programs are no longer needed, as the Pentagon apparently has decided with respect to the U-2 spy plane? If we are willing to cut 80,000 active duty personnel from the military rolls — about 15 percent — why should we hesitate to cut a similar percentage from the non-military federal government payroll? If we are willing to close military bases, why shouldn’t we end federal programs, like those that fund advertisements to use your seat belt, that have long since served their purpose? Of course, there has been no such reevaluation of the true need for the morass of seemingly permanent federal programs and federal employees in the non-defense area.

During his campaigns and during his presidency, President Obama has talked a good game about fiscal prudence, but the actual evidence of his commitment to rational federal spending and deficit control has been lacking. Now his Defense Secretary has recognized the “reality of the magnitude of our fiscal challenges” and has used that reality to justify proposed reductions to the arm of the federal government that protects us from peril. If President Obama doesn’t use the “reality of the magnitude of our fiscal challenges” to make similarly significant reductions in domestic spending, he will lose whatever remaining credibility he may possess on budget control issues.

You can’t cut the jobs of soldiers and sailors, but continue to spend like a drunken sailor on every federal program we’ve inherited from the New Deal onward.

Time For Another Crisis!

It’s been at least two weeks since the impending “fiscal cliff” disaster was avoided at the last minute.  That means it’s time for our grossly dysfunctional, leaderless government to stumble into crisis mode, again.

This time, the deadlines are in March and April, and one of the key issues is the debt limit.  The debt limit now stands at $16.4 trillion — that $16,400,000,000,000 — but that staggering sum is not enough for our debt-ridden, spending-obsessed, deficit spending-addicted country.  At a press conference yesterday, President Obama said Republicans should just raise the debt limit, without insisting on spending cuts.  We’re not a “deadbeat nation,” he said, and the full faith and credit of the United States should not be a “bargaining chip.”  If agreement on raising the debt ceiling can’t be reached, he says, Social Security and veterans checks might be delayed.

It seems awfully early in the game to play the Social Security card and scare seniors and veterans.  Unfortunately, they aren’t the only ones who are frightened by another crisis brewing.  This morning, global markets are stalling due to concerns about the debt limit, and the ratings agency Fitch says if the debt ceiling issue isn’t resolved promptly America’s credit rating could drop.

At his press conference, the President said he was willing to talk about spending cuts to stabilize the debt, but that such spending cuts should be discussed separately.  We’ve heard that song before, but cuts never get made, programs never get eliminated, and trillion-dollar deficits go on and on.  For all of his talk, talk, talk, the President has shown no willingness to take the courageous spending reduction steps that truly are needed to get our debt problems under control.  Like Wimpy, the President would rather promise to pay us Tuesday for buying him that hamburger today.  After four years, however, the bill hasn’t been paid, and there is no sign it will be paid.

I think Republicans have concluded that, deep down, President Obama would be perfectly comfortable to let the spending and big deficits continue until he leaves office, and that is exactly what will happen if he isn’t forced to sit down at the table and bargain.  If the Republicans see the debt ceiling as a fail-safe means of forcing some hard negotiations with the President that produce real progress on federal spending and the deficit, the President has only himself to blame.