Steuerle and Roeper Bring Us the Fiscal Democracy Index

In today's USA Today, Gene Steuerle discusses the "Fiscal Democracy Index," defined as the percentage of federal revenue not allocated for mandatory programs, including interest payments.  It is not a pretty picture:

and here is something that I did not know (links in the original):

For the first time in U.S. history, in 2009 every single dollar of revenue was committed before Congress voted on any spending program. Meanwhile, most of government's basic functions — from justice to education to turning on the lights in the Capitol — are paid for out of swelling, unsustainable deficits.

Blame the recession for some of this dip. But even a recovery only temporarily restores a bit of financial freedom, not enough to reverse the downward trend.

No more annual appropriations are needed to fuel this vicious cycle. On our current path, Rip Van Congress could take a 50-year snooze, and the entire budget (and then some!) would still be spoken for. Tax revenues would rise with economic growth, but not as fast as spending and deficits.

The index is poised to enter the dead zone again later this decade under current law if the president and the Congress don't take more spending and tax subsidy programs off the automatic growth path and then match up revenues to whatever size government they think is right for the times. In particular, they must constrain, cap or set triggers on how much future health, retirement and tax subsidies — the big ticket items — can grow without any vote by Congress.

Both Democratic and Republican presidents and Congresses have presided over this shocking decline — fighting mainly over which downward path we'd take: by cutting revenues without reducing spending or increasing spending without raising revenues commensurately.

Certainly, President Obama didn't create this predicament — whatever the ultimate deficit impacts of stimulus spending and health reform, his two major initiatives to date. But he doesn't have the option of behaving like his predecessors. For instance, President George W. Bush accommodated the disease by paying for neither lower taxes nor new permanent drug benefits.

President Bill Clinton and the Congresses of his time tackled some deficits but eventually kicked the can of ever-growing health and retirement benefits down the road. By the time Obama took office, we had basically taken democracy — the right to have lawmakers represent our real interests — out of the hands of newly elected officials.

Read the whole thing.

 

Gene writes excellent stuff.

Gene writes excellent stuff.

One quibble I have with this particular piece is that I think it's a bit hyperbolic to speak of projected mandatory spending as having "taken democracy — the right to have lawmakers represent our real interests — out of the hands of newly elected officials". I assume Gene doesn't mean it quite that absolutely or he wouldn't bother encouraging our current officials to change related policies. Perhaps I'm nitpicking, but we're talking about a substantial difference as a matter of degree, rather than anything approaching an absolute. I think a good metaphor would be that discretionary spending can be steered like a small boat, closer to turning on a dime, whereas mandatory spending, particularly entitlements for seniors, can only (fairly, in the eyes of most voters) be scaled back gradually (phased in), turned gradually like a large ship.

Of course, at least as troublesome (and, unfortunately, synergistic with the point above) is that the substantial growth in the 65+ population as a percentage of the total, coupled with their high voting rates and (I presume) their tendency to weigh protection of their entitlement benefits heavily in their choice of candidates, will make it even tougher for politicians to scale back such spending in coming decades. (That increased political difficulty will probably be partly offset by the fiscal [blank] hitting the fan and the voters finally being confronted with the need to choose among painful options, positioning cuts in projected mandatory spending more as the alternative to even higher taxes and even lower spending elsewhere than is the case today.) The 65+ population as a percent of total is projected to grow from about 14.8% today to 18.1% by 2020 and 21.7% by 2030 http://www.census.gov/population/www/projections/usinterimproj/natprojta...