Myth: Federal government out of control
George Curry | 11/11/2013, 9:28 a.m.
(NNPA) – The Republican push to reduce the federal deficit solely through spending cuts is based on mythology rather than fact. That was clearly demonstrated by a series of reports issued recently by the non-partisan Center on Budget and Policy Priorities.
In a report issued Oct. 28, CBPP stated, “As a new budget conference committee seeks agreement on spending and tax priorities for the next decade, some policymakers and commentators who believe that future deficit reduction must come solely from spending cuts will likely repeat the claim that the federal government is exploding in size. The data do not support such a claim.
“To be sure, total federal spending as a share of gross domestic product (GDP) rose considerably in 2008 and 2009 and remained high in 2010 and 2011, in part because GDP was unusually low due to the Great Recession and its aftermath. But spending dropped significantly in 2012 as a share of GDP and, as the latest Congressional Budget Office (CBO) data indicates, this downward trend is expected to continue over the next five years.”
The report, titled Size and Reach of Federal Government Are Not Exploding, notes that those backing deep cuts in social programs neglect the real reasons for increased federal spending.
“While total federal spending will rise modestly as a percent of GDP during the latter part of the decade under a continuation of current policies, that is mostly because of a marked increase in interest payments,” the report stated. “In particular, as the economy recovers, interest rates will also rise, simultaneously increasing the interest we must pay on any given amount of debt.”
The study also found, “Under a continuation of current policies, total federal spending – including interest – will drop from 24.1 percent of GDP in 2011 and 22.8 percent in 2012 to 21.5 percent in 2013, before starting to rise in the middle of the coming decade, climbing back up to 22.7 percent by 2023. At least three-fourths of the increase between mid-decade and 2023, however, will come from higher interest payments on the debt. Interest payments are not a federal program, and increases in interest costs do not themselves represent an expansion of the government’s activities or reach. It should also be noted that interest costs rise when taxes are cut, because the tax cuts add to deficits and debt just as spending increases do.”
As I noted in this space last week, more than 90 percent of so-called entitlement benefits go to the elderly, disabled or working households. Furthermore, as the Center on Budget and Policy Priorities observed, increased spending on safety net programs because of the recession is both appropriate and temporary.
“Congressional Budget Office (CBO) projections show that federal spending on low-income programs other than health care has started to decline and will fall substantially as a percent of gross domestic product (GDP) as the economy recovers. By the end of the decade, it will fall below its average level as a percent of GDP over the prior 40 years, from 1973 to 2012. Since these programs are not rising as a percent of GDP, they do not contribute to our long-term fiscal problems,” CBPP said in a report titled, Low-Income Programs Are Not Driving the Nation’s Long-Term Fiscal Problem.