Congress Dawdles on America's Unsustainable Path
"I'm very pleased to be back here," said Douglas Elmendorf, director of the Congressional Budget Office, in his opening statement to the House Budget Committee today. "What part of 'unsustainable' don't you understand?"
OK, he didn't ask that question, but he might as well have. Elmendorf, along with other budget experts, have been warning that federal spending and revenue are on an unsustainable path; that unless Congress makes major changes to entitlement programs and income tax rates, the debt held by the public will reach 100 percent of gross domestic product in 25 years, more than at any time since the end of World War II. That path "cannot be sustained," Elmendorf said.
Economist Herbert Stein once said, "If something cannot go on forever, it will stop." We're still waiting. As Congress debates yet another short-term continuing resolution to avert a federal government shutdown down on Oct. 1, a grand bargain isn't even on the agenda. The debate that relates to the budget is over the automatic spending cuts to discretionary programs implemented in March. Spending on everything except health-care programs, Social Security and interest on the debt is on track shrink to 7 percent of GDP -- the smallest share since the late 1930s -- from a 40-year average of 11 percent, Elmendorf said. The number of people eligible for Social Security will rise by a third in the next 10 years.
Congressional hearings offer the members an opportunity to put their ideological views in the witness's mouth. If a member doesn't get the answer he wants, he is happy to help the witness out. For example, the ranking Democrat on the committee, Chris Van Hollen, prodded Elmendorf to agree that "the reason the deficit in 2035 is much higher under this report than in previous reports is because we changed the tax law and less revenue will be coming in."
That's when Committee Chairman Paul Ryan jumped in to ask Van Hollen if he were advocating an increase in taxes on middle-income Americans. Van Hollen accused Ryan of doing just that with his proposed budget. Sandbox time: Did not! Did too!
Congress voted to let the Bush tax cuts on the top 1 percent expire and made the temporary cuts permanent for everyone else. There isn't enough tax revenue from the wealthy to fix the debt, even at a tax rate of 100 percent. Neither party wants to face reality: Middle-class taxes will have to go up because that's where the revenue is.
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)