Lee Hamilton: Where our money goes

Lee Hamilton

Lee Hamilton

Our leaders have not leveled with us about what it takes to get a sensible budget and put the economy on a path to recovery. Let’s stop the blame game and get to work.

Over the last few weeks, as the deadline for the congressionally mandated budget cuts known as the “sequester” came and went, we got a taste of how difficult cutting federal spending actually turns out to be. The news is disconcerting: thousands fewer food safety inspections, some 70,000 fewer kids in early education programs, people with mental illness losing access to treatment, civilian employees of the military furloughed, ships and aircraft going without maintenance… It’s a long and dispiriting list.

Yet as painful as the sequester might be, most policy-makers know that it is not the main event when it comes to our fiscal challenges. Discretionary spending, the kind getting cut in the sequester, amounts to less than a third of federal spending.

That’s not what many people believe, of course. Whenever I give talks about the federal budget I’m taken aback by where my listeners think most of our money gets spent. At two meetings recently, members of the audience stood up to complain that if we just cut what we give away to other countries in foreign aid, we could resolve our budget issues. This isn’t even close to the truth: altogether, we spend well less than 1 percent of the federal budget on foreign aid.

If you think of federal spending as a pie, by far the biggest slices go to Social Security and unemployment support, Medicare, Medicaid, and other health programs, which altogether make up well over half. Military spending accounts for about another quarter, while the next biggest slice, about 7 percent, is for interest on the federal debt — a figure that will explode in upcoming years. Everything else we think of as the federal government — spending on highways and the aviation system, money for student loans and other education programs, housing, food stamps, medical research and, yes, foreign aid — comes in at under one-fifth of the total.

The biggest driver of growth in federal spending, as Nate Silver of The New York Times pointed out in a thoughtful analysis in January, is entitlements: Medicare, Medicaid, Social Security and other social insurance programs. This is especially true of health care, which accounted for about half of the increase in federal spending relative to the economy over the last 40 years. We cannot get control of federal spending without reining in health care spending — and though its rate of increase has slackened over the last few years, no one knows whether it’s a permanent or temporary change.

So if Congress and the White House are serious about tackling federal spending, then the piece they left out of the sequester —entitlement reform — must be on the table. But it’s been hard to tell from their actions that they’re really serious. Members of Congress have been taking to the airwaves for weeks to decry the sequester’s meat-cleaver approach to budget-cutting, yet most of them voted for it. That’s because it’s simpler to impose across-the-board cuts than to make discriminating judgments about individual programs. Members find it easy to demand cuts in federal spending in the abstract, but painfully difficult to cut specific programs.

Americans as a whole do, too: a recent Pew Center poll found they approve cutting government spending in general, but when asked about specific programs, they want to boost funding or keep it the same. Americans are demanding that government cut spending without cutting actual programs.

This is why it takes extraordinary leadership to address our fiscal issues. Americans may bear some responsibility, but our leaders have not leveled with us about what it takes to get a sensible budget and put the economy on a path to recovery. I am hard-pressed to think of an example of government failure to match our political leaders’ inability to lead us to a solution.

Their prolonged fighting is causing businesses to hesitate, workers to remain in limbo, and an economy that needs a boost to continue to stutter. They are denying us the ability to invest in our future, promote economic growth, and deal with the many other challenges our nation faces. Let’s stop the blame game and get to work.

Lee Hamilton is director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

 

One Response to Lee Hamilton: Where our money goes

  1. Mack Hargrave Reply

    March 13, 2013 at 10:31 am

    What is congress to do? Ultimately they can do nothing in the way of cutting entitlement spending in the big programs until we the people finally sober up and give them the OK to do so. In order to do that, we the people must grow up and realize that it is up to us to reclaim the responsibility for responsible governance.

    Face it, We have been duped into thinking that we can go on taking too much from the taxpayers, and spending over half of it on income redistribution. That is the concept of “entitlements”.

    Just yesterday, President proudly proclaimed that he was not interested in a balanced budget. Saying this to Stephanopolis, “And, so– you know, my goal is not to chase– a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we’re gonna be bringin’ in more revenue. If we’ve controlled spending and we’ve got a smart entitlement package, then potentially what you have is balance. But it’s not balance on the backs of, you know, the poor, the elderly, students who need student loans, families who’ve got disabled kids. That’s not the right way to balance–” (the emphasis is mine).

    This is shocking. Mr. President, how about you chase a balanced budget for the sack of instilling some discipline in federal spending? Or how about you chase a balanced budget for the sake of, well, saving this country from bankruptcy?

    Obama is completely without the courage to enforce the same discipline on the government that we the people have to enforce on our families every day. If this was a short term plan with controls and sunset provisions, as in wartime, it would be bad enough. But his plan is to continue spending without restraint – and hope the economy grows at a miraculous pace, thereby wiping out the debt? We are going into our 5th year of that. How’s it looking so far Mr. President?

    Also note that Obama slips in the obligatory condemnation of the opposition plan by accusing them of the willingness to hurt the truly needy. In other words, only his motives are responsible and none other.

    We let this happen. Congress cannot act under this assault of misinformation and childish thinking. Increasing taxes is not the answer because that only gives government more money to waste. A balanced budget is absolutely essential. You know it, I know it. Realizing that many of us will have to adjust to a new reality, we have to stand up now. Nothing can be sacred. Social Security, Medicare, Obamacare, Unemploymnet compensation – nothing can be left as is unless the balanced budget process can fit it in.

    Tell this President that you are not buying into this any more. He has to lead with discipline and wisdom. Tell him to stop campaigning and stubbornly embracing an agenda that threatens our national sovereignty.

    Until this President changes, Congress cannot act.

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