I used my first column for The Fiscal Times to take on all those who insist that the only way to deal with the federal deficit is by cutting spending. Contrary to those who repeat the "it's a spending problem" mantra, spending definitely is not the only issue and spending cuts are not the only possible response.
I agree that Eugene Steuerle's "Fiscal Democracy Index offers a chilling new perspective on the declining state of federal finances. Like Andrew Samwick, I too hadn't realized that 2009 was the first year in which all Federal revenues were consumed by promises made in the past -- entitlement programs and interest on the debt. All discretionary programs, the ones that Congress has to vote to fund each year, were paid with borrowed money.
Here are some other factoids that I only recently learned, courtesy of Fitch Ratings (see attachment at bottom of this post), which warned earlier this month that the United States' AAA rating could be at risk if don't make some sort of fiscal headway in the next three to five years.
Point One: We often hear that the US government debt load is lower as a share of GDP than those of many other large, wealthy nations, including Japan, Germany, the UK and France. But a more apples-to-apples comparison, which combines federal, state and local government borrowing, suggests that the US is in worse shape than most other AAA-rated countries.
(Note: I'm tempted to simply say "same old, same old." In fact, the results shown below don't seem have changed much in the more than three decades since I started working on the federal budget. Andrew is too young to be able to say that, but I suspect that if they admitted to their real age Pete and Bruce would agree.)
Just in case you have any doubts about why there are deficits, this paper from the American Enterprise Institute with a compilation of polling results about attitudes toward government involvement in the economy and federal spending says it all. Here are excerpts from the money quotes:
Questions that ask Americans whether they would like a smaller government with fewer services or a larger government with more services usually produce a preference for smaller government.
The Treasury announced and the media dutifully reported yesterday that the fiscal 2009 federal budget deficit reached $1 trillion in June. Here's what Bloomberg said in the first two paragraphs of its story:
July 13 (Bloomberg) -- The U.S. budget deficit topped $1
trillion for the first nine months of the fiscal year and broke
a monthly record for June as the recession subtracted from
revenue and the government spent to rejuvenate the economy.
The shortfall for the fiscal year that began Oct. 1 totaled
$1.1 trillion, the first time that the gap for the period
surpassed $1 trillion, Treasury figures showed today in
Washington. The excess of spending over revenue for June was
$94.3 billion, the first deficit for that month since 1991,
according to data compiled by Bloomberg.
At least, that what Diane Rogers over at EconomistMom.com said.
It's always nice to think that someone, anyone, is reading and listening. As Andrew and Pete will tell you...you never really know.