By Donella Meadows
–February 9, 1995–
Every day the U.S. government borrows over $700 million, obligating every man, woman, and child of us to add another $3 to our individual share of the national debt. Every day. The interest we pay on that debt amounts this year to an average of $848 apiece. Americans of every political persuasion are upset by this enormous debt load. But in Washington hardly anyone of any political persuasion is talking straight about the budget. If anyone were, this is what he or she would be saying:
- The Balanced Budget Amendment is nothing but smoke and mirrors. It allows members of Congress to pretend to vote for a balanced budget, while in fact voting for a future Congress to balance the budget in the year 2002 — if the amendment manages to pass 38 state legislatures before then.
- Though each party blames the other, in fact the soaring deficits that began in the 1980s were created by Republican presidents and Democratic Congresses.
- Any time the president and Congress want a balanced budget, they can have one without meddling with the Constitution. They just have to vote for a balanced budget.
- No one in his or her right mind would balance the budget immediately. That would cause an economic lurch that no one wants to go through. The year 2002 might be a good target date for bringing the deficit to zero, with a clear plan for decreasing deficits from now till then.
- Neither Republicans nor Democrats have come up with such a plan. During the 1980s several unrealistic multi-year plans for deficit reduction were produced, approved, and then ignored. Frustration over that experience is a driving factor behind the Balanced Budget Amendment.
- One reason previous budget-balancing plans were ignored was that neither the president nor the Congress stopped throwing public money at favorite districts, industries, campaign contributors, and causes.
- Another reason was that selfishness blocked compromise. To reduce the deficit we have to spend less or tax more or both. Every interest group with money to lobby fights against its spending being decreased and its taxes going up. In an atmosphere of pure taking and no giving, the budget will never balance.
- Cutting welfare is politically irresistible, because the poor can’t afford to lobby, can’t make campaign contributions, and are too dispirited to vote. But even if we eliminated welfare entirely, the budget wouldn’t balance.
- Another reason why the federal budget has not been, will not be, and should not be balanced is that it is a strange budget, It doesn’t distinguish between operational spending and capital investment — between paying salaries, electric bills, and other immediate expenses on the one hand, and on the other hand building highways or investing in research or something else that will pay off over many years. Every corporation, household, and community, and nearly every state, makes that simple accounting distinction. Towns and states float bonds to build schools or prisons. Families get mortgages to buy houses. Corporations borrow to build factories. The operating budget should balance. The capital budget, if investments are prudent, need not.
- The federal budget is weird in another way — it confuses dedicated trust funds, the largest of which is Social Security, with the rest of the budget. This year the trust funds will run a surplus of $100 billion, which, because of the accounting confusion, makes the deficit look $100 billion smaller than it really is.
- If the military budget were subjected to as much scrutiny as the rest of the budget, many opportunities would be found to cut spending there without endangering national security.
- Even if that were done, and even if the budget were clearly separated into operating, capital, and trust fund budgets, it still might be necessary to raise taxes to accomplish everything the nation needs to do, while balancing the operational budget. We could survive a tax increase. Americans are the most lightly taxed people in the industrial world.
Within living memory it was possible to talk about Pentagon cuts or tax hikes without going into national conniptions. Until a few decades ago peacetime government budgets came close to balancing. The main reason for the growing childishness and irresponsibility of the federal fiscal process is the growing role of TV in politics and thus the growing power of money in Washington. Political soundbites cost millions and convey only image, not substance. In nine seconds it’s hard to distinguish a Balanced Budget Amendment from a balanced budget. And with every politician obligated to campaign contributors for his or her election, the public good is no longer represented. The only people and organizations represented are those who have paid for not having their perks cut or their taxes raised.
There’s something else that no one in Washington is saying straight. Term limits are nothing but a smoke-and-mirrors way of avoiding real campaign reform.
Copyright Sustainability Institute 1995