IHT Rendezvous: Taming the Runaway U.S. Budget

WASHINGTON — If Democrats and Republicans can’t agree on a deficit reduction plan, in two weeks automatic budget cuts will kick in that could severely weaken the U.S. economy and the American military.

As I write in my latest Letter From Washington, there are sensible ways to avoid this, though it is far from certain dysfunctional Washington can achieve them.

One reason is that so much of spending is now hard-wired into the system.

Representative John Dingell of Michigan is the only current member of Congress who served in 1962. Yet he would hard-pressed to recall the federal budget of a half century ago.
In those days, more than two-thirds, 67.5 percent, of spending was discretionary, meaning it had had to be appropriated annually. Almost half the budget went to defense and about 18 percent went to discretionary domestic programs.
Mandatory spending, or entitlements, was only a little more than a quarter of the budget, and more than half of that went for Social Security.
That picture is turned upside down in the current fiscal year. Almost 60 percent of the budget is mandatory spending with one $1 of every $5 going to Social Security and $1 in $7 to Medicare and Medicaid. Defense is almost 19 percent, a fraction of what it was in 1962, and domestic discretionary programs, at a little more than 16 percent, takes a smaller proportional bite out of the federal budget than they did a half century ago despite the creation of so many new initiatives.
This isn’t going to change. “Regardless of who is president, what will be spent in any given year will be determined by laws that are already set, some decades earlier,” says Stan Collender, an expert on the federal budget.
Despite the large budget deficits in recent years, interest on the debt payments, at 6.5 percent this year, is almost precisely what it was a half century ago. These payments, however, are expected to climb steadily over the next 50 years. Under current projections, Mr. Collender says, they are on track to become the fastest-growing area of the federal budget.

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