Rethinking the Federal Budget

A US default has once again been averted, and the debt ceiling will be raised. Suspending the debt ceiling, even temporarily, provides an opportunity to evaluate the budget-setting process. Time for a rethink.

The current approach would lead one to believe that the objective is for the government to spend as little money as possible. Rather than starting with the current budget and looking for places to cut, an evaluation of needs would be a preferable way to ascertain whether adequate support is being provided for all those non-defense discretionary services – schools, roads, space exploration, energy, courts, public safety, veterans benefits and a safety net for the poor, among others – that make up 15% of the 2023 fiscal year budget, and are the targets of budget-slashers.

What is a reasonable way to look at needs? Consider this: The US, the wealthiest country the world has ever known, is falling short in preparing for its future, as attested by its international rankings:

• 37^th for student scores in mathematics
• 18^th for student scores in science
• 13^th for student scores in reading
• 30^th in overall quality of healthcare system
• 11^th in quality of infrastructure
• 28^th in poverty rate for children under 18
• 36^th in poverty rate for people over 65
• 33^rd in income equality/equal distribution of income
• 15^th lowest in general government spending as percent of GDP
• 15^th lowest tax rate for high-income individuals
• 46^th lowest in life expectancy

Ranking 15^th or 28^th or 36^th suggests that the US can do a lot better in preparing its people for a fulfilling life. A theme of Fifty Year Perspective is that everything is related to everything else. That is true of this list. Poor education and healthcare beget poverty. Inadequate infrastructure places good jobs out of reach, limiting potential for some workers to raise their income. More to the point, a subset of the US population carries the burden of all these shortcomings. For the future health of the US economy, maximizing the productivity of everyone in the work force will be necessary to offset the effects of an aging population.

Clearly the tax cuts of the last two decades were mistakes. They did not pay for themselves. The 2017 Trump tax cuts cost $1.7 trillion dollars in lost revenue. Those 2017 tax cuts combined with the Bush tax cuts and their extensions through Obama administration years have cost $10 trillion since their creation.  Raising taxes on high-income individuals and corporations would only go so far. The goal should be an equitable budget that increases opportunity for more persons to thrive and contribute to economic growth; a budget that includes enough revenue to pay down debt, not just make interest payments, looking to a future when borrowing, if necessary, does not generate interest payments that claim 10% or more of budget dollars.