It's a week later, and Americans still have lousy options regarding the federal budget.
Oh, the debt ceiling crisis will be averted. But not after nearly five months of "extraordinary measures" taken by the Treasury to shift accounts around to forestall the default that should have happened in January. Sort of like opening another credit card account to pay off the balance of an existing balance.
Except for the Treasury, their new credit card comes with higher interest rates. Treasury bond rates are going up. That means the cost of the interest on the national debt is going up. That's a problem. At current spending rates, a quarter of the budget will be spent on interest in 30 years, in 60 years, it will be half.
The urgent reality is simple in concept but seemingly impossible to execute: spending should balance with revenues. While the Republicans want to do this by cutting spending, and Democrats by raising taxes, neither original proposal actually did enough of either to make a significant dent in the debt.
The compromise deal doesn't either: while it is the first deficit-reducing budget in 12 years, the reduction is less than a percentage point. Since fiscal year 2023 began last October, the government has spent $925 billion more than it has brought in, according to the Treasury.
Some elements of the deal make a great deal of sense to me: stopping student loan debt forgiveness is probably the biggest ticket item. Asking taxpayers who didn't attend college to pay for the student debt of those who did is the most regressive form of taxation I can imagine. Oh, and we can't afford it.
There is a lot more we can't afford, and some of it falls into the categories one, or the other, or both, parties finds "sacred." That's the big three – Social Security, Medicare, and defense.
Social Security and Medicare are considered non-discretionary, or mandatory, spending. That means that new legislation would be required to change those spending levels. Defense is discretionary spending, meaning that budget is set each year by Congress.
In current 2023 spending, these three areas are the three largest-ticket items in the budget. Number four is "healthcare" which is mostly Medicaid grants to states, followed by net interest (remember that debt I've been banging on about?).
Combined, these five items comprise about 68% of fiscal year 2023 year-to-date spending, according to the government website USASpending.gov. Only defense and healthcare are discretionary spending – eligible for trimming without further legislation. Of these, Medicaid is probably first on the list for cuts, which would be bad news for New Mexico where 73% of babies are born under Medicaid coverage.
But face it, that won't happen. Congress doesn't have the stomach for it.
The defense budget is massive - $842 billion proposed for the coming fiscal year – and disturbingly unauditable. Congress passed a mandate in 1990 that the Department of Defense must be audited. DoD didn't even attempt it until 2017. It has not passed a single audit of five conducted since then. The 2017 audit cost nearly $428 billion dollars to conduct and another $472 billion to attempt to resolve the issues raised. Current annual audit costs are approaching a billion dollars.
As a defense contractor, this seems problematic to me, and an indicator of larger problems. Congress needs to do more than write large checks to the Pentagon. Individual program costs should bear scrutiny. But these multi-year, multi-billion-dollar programs are carefully programmed to bring jobs to as many congressional districts as possible, discouraging cuts.
Besides taking a hard look at defense costs, Congress must address "improper payments" made by federal agencies and tracked annually by the Government Accounting Office. In fiscal year 2021, these payments totaled $281 billion, and in 2022, $247 billion. Going back to 2003, a total of $2.4 trillion from executive agencies is estimated to have been paid out improperly, most of it in the form of overpayments.
Just recovering half a trillion from the last two years would make a dent in the Treasury. It would pay almost half of our current fiscal year's debt interest.
The truly tough decision has to be made by us, the voters. We have gotten very comfortable with the status quo. We don't want to hear about "austerity." Only a very few of our elected leaders are brave enough to offer meaningful solutions regarding a balanced budget. Are we willing to demand one?
Merritt Hamilton Allen is a PR executive and former Navy officer. She appears regularly as a panelist on NM PBS and is a frequent guest on News Radio KKOB. A Republican, she lives amicably with her Democratic husband north of I-40 where they run two head of dog, and two of cat. She can be reached at news.ind.merritt@gmail.com.