Short-Term Budget Thinking by Rs and Ds

Congressional Republicans and Democrats have put forth competing budget proposals to cut spending by a tiny amount for the current fiscal year, and both plans are expected to fail in the Senate. What's remarkable about these votes is the delusion on both sides of the aisle.

Democrats like John Kerry believe that a cut of $61 billion in a nearly $4 trillion budget is "dangerous," while some Republicans appear to believe that this cut is meaningful. Both perspectives reflect a short-run mentality that permeates decision making in Washington. Until long-run concerns take center stage, real budget reform that helps us avoid a coming fiscal crisis will be elusive.

The short-run perspective shared by most members of Congress is driven primarily by the drive for reelection. A real fix to the budget will almost surely involve short-run pain in order to secure long-run benefits.

The problem is, Congressmen fear that when voters go to the polls they will see the pain but not the gain, and vote accordingly. Despite protests to the contrary, politicians go to Congress to stay in Congress, and they'd rather cast an easy vote and coast to reelection than take a hard vote and risk electoral defeat.

The short-run obsession shared by members of Congress is aided and abetted by the media and voters. In recent weeks, straight news articles have discussed how proposals to "slash" spending would hurt schools, the environment, the poor, women's health, farmers, air travel, public radio, and the arts, to name a few. If this is how a tiny cut in spending is covered, imagine how real reform would be reported on! Stories about the consequences of delaying budget reform are relatively rare.

Major news organizations also commission polls that ask questions about a fantasy world in which our long-run budget problems can be solved without cutting entitlements. For instance, in a recent WSJ/NBC poll, respondents were asked, "Do you think it will be necessary to cut spending on Medicare, the federal government health care program for seniors, in order to significantly reduce the budget deficits?" Only 18 percent of respondents answered yes.

Clearly, the public still needs to be educated about the fiscal problems we face. But this question is phrased as though it is a matter of opinion.

The fact is, there is no alternative but to reform Medicare; inaction is not an option. (Massive tax increases won't work, because the system would break down before sufficient revenues could be raised to finance the coming surge in federal spending.) In news coverage, these responses are framed as evidence that the public does not support reform to entitlements, when the real story is that the public does not yet understand that this reform is necessary.

This is a real distinction. If the public is better educated about the need for serious entitlement reform to secure a better future for coming generations, then politicians will be able to vote for long-run changes even in the face of short-run pain, because voters will understand it's necessary. What politicians need to do, then, is not focus on changing voter's minds, but instead on educating voters. This of course requires leading rather than following, and not very ironically, leadership is in short supply in Washington these days.

Time is of the essence here. Delaying necessary reforms increases the pain and cost of righting our fiscal ship. Just as it easier to start saving for retirement at age 30 than at age 60, entitlement reform will be more digestible the sooner we begin to act. Elected officials need to start leading and educating.

The media need to reorient coverage away from today and toward tomorrow. And voters need to start rewarding, not punishing, legislators who vote for long-run interests over short-run desires.

These changes won't be easy - our instinct as human beings is to focus on the short-run over the long-run - but they are necessary to prevent much greater budgetary pain in the future.