SaltyPoliticalMusings

Why the U.S. may Never have a Balanced Budget Again

From CNN.com

After the House passed the nearly impossible to stomach Ryan Budget Plan 2.0, some have begun to ask themselves: are we ever really going to balance the budget?  Or are partisans in congress simply too determined to “win” the imaginary, foolish, masochistic battle for the soul of America? To prove that their bad ideas are better than the other guys’ bad ideas?  It has been clear for years that the only conceivable way to get close to balancing the budget (in a realistic timeline less than five future presidencies) would be to compromise, passing aggressive cuts to spending, especially in my liberal friends’ beloved entitlement programs, as well as raising taxes across much of the economic spectrum, especially on my conservative friends’ beloved “job creators”.  Yet because real, pragmatic government work is hard, and often unpopular with the ever-important big-money donors/political puppet-masters, our representatives continue to fail us and future generations.  Some have begun to argue that rather than create sweeping plans that are destined to fail, or simply play a part in the partisan charade, we should think about containing the deficit, not eliminating it.  Making cuts and taxes raises we will not like, but can stomach better than the other paths to austerity that would more harshly affect the average citizen. Lisa Desjardins recently did a spot on this topic in a special for CNN Radio:

The House has passed the Republican budget plan submitted by Rep. Paul Ryan, but some budget experts believe that he federal government is so far in the red that it may not balance the budget again in our lifetime.

“We may never, as a country, have a balanced budget again,” said Marc Goldwein, policy director for the Committee for a Responsible Federal Budget. “And you know what? We don’t have to.”

Goldwein is a bit of a budget wunderkind who was also a staffer for the Bowles-Simpson Commission, established by President Obama to address the nation’s fiscal problems, and for the congressional super committee. He and the nonpartisan think tank where he works used to push vehemently for a balanced budget.

But no longer. Now the bumper sticker hanging in his cubicle reads, “Stabilize the Debt.”

He feels that Washington has fallen so deep into the deficit hole that it has set off a seismic shift among some fiscal hawks. They now hope to contain the deficit, not erase it.

“It’d be great if we could balance the budget,” Goldwein said. “But … it’s just not realistic to look at balancing the budget right now. Right now, what we need to look at is bringing the debt down relative to the economy.”

The Ryan budget, despite its cuts and aggressive fiscal moves, does not balance the budget for at least 23 years, according to the House Budget Committee and the Congressional Budget Office.

“This just shows you how deep of a hole our country is in,” Ryan, a Wisconsin Republican and chairman of the Budget Committee, said when asked about the 2035 budget balance date.

But in a city where politicians pass appropriation legislation for a few months or sometimes even a few days at a time, such a long timeline for balancing the budget seems hypothetical at best and meaningless at worst.

Hence that unlikely catchphrase “stabilize the debt.”

The idea is to keep government’s annual deficits small enough that they are outpaced by the growth in the economy. That, some say, would stop the current explosive path the national debt is on.

For example, the Congressional Budget Office estimates that the 2011 deficit was nearly 9% of the economy, as measured by gross domestic product. But GDP itself grew by less than 2% during the same time.

Think of the economy as a living thing, like a tree. If the tree grew by a couple of feet last year but the deficit burned up several times that growth, it would use far more resources than had been created in the past year.

Goldwein and those who share his outlook want a budget under which that tree, the economy, grows by more than the deficit is burning and keeps adding fiscal height overall.

But under this scenario, the debt itself would probably grow — just more slowly.

“We don’t need a balanced budget,” Goldwein concluded. “What we need to do is stabilize the debt relative to the economy.”

To do that would take about $4 trillion in deficit cuts, he and others estimate. The Ryan budget gets there, but barely.

The problem?

“We’re not going to get to this with one party,” Goldwein asserted. “The public, I don’t think, is going to be able to tolerate the level of cuts in Congressman Ryan’s plan, even though the level of deficit reduction is only a little bit more than what we need.”

Neither, Goldwein said, would the public tolerate a federal spending plan that cuts the deficit solely by raising taxes.

So nearly everyone in Washington admits that it would require compromise, but few admit that even a tough-to-get compromise most likely will just stabilize the budget, not balance it.

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This entry was published on March 31, 2012 at 10:04 am. It’s filed under Politics and tagged , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

One thought on “Why the U.S. may Never have a Balanced Budget Again

  1. It’s an interesting idea. Certainly I agree that the deficit is a bipartisan problem, and I hope that liberals and conservatives can agree that something needs to be done about it.

    Whether we want to eliminate the federal deficit or only contain it (and stabilize the debt), the question is, how do we force the politicians to be responsible and do it?

    Have you heard about the Balanced Budget Pledge?

    I will not send money to and I will not support any Senate or Congressional Candidate until that candidate has agreed to pass the People’s Balanced Budget Amendment or a substantively similar Amendment*

    It’s a way to try to force our politicians to take the deficit seriously and pass a balanced-budget amendment. If enough of us take the pledge, I think we can really make it happen. If you agree, help spread the word!

    People can publicly take their stand here:

    http://www.wedemandabalancedbudget.com/

    More about this, how it works, and why we need it here:

    http://enjoymentandcontemplation.wordpress.com/2012/05/16/the-peoples-balanced-budget-amendment/

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