In 1989, a real estate developer named Seymour Durst unveiled a National Debt Clock in New York City to record the steady and staggering increase of the national debt.
Two years ago, they turned the clock off because, with the government running surpluses, the debt was shrinking. But two weeks ago, the clock started up again – and it will be running for some time to come.
The federal budget deficit is back. After a brief, glorious era of surpluses, the government expects to go $165 billion into the red this year. Next year may be even worse. Although the administration predicts the deficit will fall to $109 billion in 2003, congressional estimates on both sides of the aisle run upward of $190 billion. Congress and the administration have a duty to do something about this alarming development. And they are doing something about it: They're taking steps to make it bigger.
Last summer, the budget sky was blue. In the fiscal year that ended last Sept. 30, Washington took in $127 billion more than it spent. That was the fourth straight year that we, as a society, lived comfortably within our means. And there was good reason to think that custom would become the norm in the years ahead. Fiscal experts predicted surpluses as far as the eye could see.
What happened? Well, a recession and a stock market decline happened, and that meant a sudden drop in federal revenues. On top of that, Sept. 11 occurred, opening a war against terrorism that costs a lot of money. Put all these together, and it's not surprising that we're spending more than we're taking in.
But that doesn't mean it wasn't avoidable. Even before these events, Congress and the president had already abandoned the modest fiscal restraint that had helped produce the surpluses. They no longer had to worry that new spending programs or tax cuts would enlarge the deficit. There was no deficit to enlarge.
In the days of fiscal austerity, anyone advocating measures that would cut revenues or boost spending faced a simple question: How can we do this when we don't have the money? Once the surpluses became routine, it was the advocates who were asking their own question: How can we not do this when we have such a big pile of cash?
As a result, spending has shot up. In 1999, President Clinton's budget estimated that in 2003, the government would spend $595 billion on discretionary programs, which include pretty much everything except entitlements (such as Social Security and Medicare) and interest payments. But in the 2003 budget proposed by President Bush, discretionary spending would amount to $789 billion. Those outlays will be 33 percent greater than we expected only three years ago.
Chris Edwards, director of fiscal policy at the Cato Institute in Washington, says that if Congress had merely held spending over the next five years to the level it planned then, it would have nearly $1 trillion in money available between now and 2007. Instead, Congress and President Bush agreed to increase spending and cut taxes, leaving nothing in reserve in case things went wrong – which as it happens, they did.
Congress has shown no interest in revisiting the tax cuts, which will drain more and more revenue each year. "The tax cut gets bigger and bigger with time," notes Robert Bixby, executive director of the Concord Coalition, which advocates fiscal responsibility. "A lot of the tax cut hasn't even gone into effect."
Likewise, spending will probably increase even more than projected, as spending usually does. That would be bad news. "Failure to reverse the spending trends of the past few years – when discretionary spending grew an average of 7 percent a year – would add $2 trillion of federal spending above the president's request" over the next decade, says the Office of Management and Budget. That's on top of hundreds of billions of dollars in increased spending that the president wants.
But there is no convincing evidence that government will reverse the trend. Just the opposite. In May, the president signed a farm bill that will boost spending by at least $83 billion over the next decade. Congress is now wrangling over adding prescription drug coverage to Medicare – which, according to estimates, would cost anywhere from $350 billion, for the House Republican version, to $800 billion, for the version that the House Democrats favor. It would be no great surprise if all these estimates turned out to be low. So the National Debt Clock is going to be running at a fast pace until further notice. The debt now stands at $6,119,331,528,850. But not for long.
To find out more about Steve Chapman, visit the Creators Syndicate web page at www.creators.com.