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When the Federal Budget Was Other Side Up

By Albert R. Hunt

Even Representative John Dingell of Michigan,  the only current member of Congress who was already serving in 1962, would find it hard to recognize the federal budget of a half century ago.

In those days, more than two-thirds of spending, 67.5 percent, was discretionary, meaning that it had had to be appropriated by Congress annually. Almost half of 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 federal outlays, and more than half of that went for Social Security.

These days, as the White House and Congress struggle over the $1 trillion package of spending cuts known as the sequester, that picture is turned upside down. Almost 60 percent of the budget is now made up of mandatory spending, with one dollar of every five going to Social Security and one dollar of every seven 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, take 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 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, Collender says, they are on track to become the fastest-growing part of the federal budget.

(Albert R. Hunt is a Bloomberg View columnist. Follow him on Twitter.)

Read more breaking commentary from Bloomberg View columnists and editors at the Ticker.

-0- Feb/17/2013 16:26 GMT

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