Whenever you watch the career politicians address a spending issue such as we are facing at the current time, they propose a “glide path” toward fiscal sanity. Invariably the majority of the necessary budget cuts are scheduled for the “out years”….the years beyond what a normal person would determine is prudent forecasting. For example, the Paul Ryan budget proposal has the budget achieving balance in ten years (9 “out years”), but with 9 consecutive years of deficit spending the Ryan proposal would leave a national debt of $24 billion in the 10th year. His plan went further in the out years with a supposition assuming years 11 and forward would generate surpluses for reducing the debt. Welcome to Fantasy Island.
The “out years” are a figment of creative political imaginations. They are more appropriately called the “doubt years” because it’s doubtful that any of the projections and assumptions in the original legislation will ever occur. Historically, the later years in long term forecasts have always been worse than the authors anticipated. Some of the more recent examples are LBJ’s War on Poverty which has squandered more than $6 trillion through the years, and our poverty rate is similar to what it was when the programs were initiated. Medicare is another glaring miscalculation (or intentional misrepresentation) as the program has far exceeded the expected costs.
There are a number of reasons for out year projections to be so woefully wrong. One is that no one can predict the future with any degree of certainty. A second is that no Congress can bind succeeding Congresses to budgetary items. The new Congress can increase or decrease (rarely done) the line items for a program without being constrained by the original estimates. Also, Congresspersons rely on the rosiest estimates and outlandish assumptions when they sell their program to their colleagues and the public. Finally, they lie…misrepresent, mischaracterize, misstate. With all due respect to Congressman Ryan, his scenario is much too optimistic, but even if it were “on the money,” it fails to solve our debt problem. By the time that the debt is being addressed, our $25 trillion hole may be too large to escape.
Despite the inadequacy of Mr. Ryan’s plan, his is the best one on the table so far. Senator Pat Toomey has introduced one that has a much steeper glide path and takes us to balance much faster, but it hasn’t had any hearings in the Senate and is also too reliant on “out year” performance. Because our fearful government officials have been raiding the candy store and giving the candy away for so many years, the size of the debt, the consequences of the debt, and the payback of the debt have grown too large for a glide path strategy to significantly correct the situation. Plus, politicians are not disciplined enough for it to work. If the political elites are serious about correcting our abysmal financial situation (I don’t believe that very many of them are), the remedy will have to be sudden and painful. Presently, roughly 43% of our annual federal expenditures are financed with borrowed funds (deficit). It should be apparent that any glide path of any length will continue to add to our $14.5 trillion debt. In addition, the political wrangling over the budget and appropriations will become more intense during the out years as politicians seek to protect favorite programs and constituencies. The most effective solution may be a radical two-pronged approach that will create massive displacement and disruption but should ignite an economic boom that should ameliorate much of the agony.
At the risk of repeating myself, the best template for restoring fiscal sanity to our federal government is to begin with the enumerated powers in Article 1, Section 8 of the Constitution. Any other guide will fail because of emotional justifications for every program, agency and department in the federal system. Each of them represents a “good idea.” Every one of them addresses a “critical need. “ None of them are efficient or particularly effective, so the Constitutional formula would minimize debate about the efficacy or necessity for much of the deficit spending. A majority of Congress must be willing to fall on the hand grenade in order to pull our nation back from the brink of disaster. The “glide path” must be for two years…one House term because it is possible that the members with the courage to do the right thing will not be re-elected.
Those of us who believe in liberty, small Constitutional government and self-reliance must be willing and ready to suffer the concussion and absorb the shrapnel when the blast goes off. Who am I kidding? There are not enough politicians to take the heat and not enough citizens to absorb the shock. We’ll continue playing our games with our fragile future by kicking the can further down the road as the “out years” become the “doubt years.” Before too long the doubt will be replaced by dismal certainty. Reality is a cruel teacher.
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