Obama's Lazy Status Quo Budget
WASHINGTON -- There is something profoundly timid about President Obama's proposed $3.778 trillion budget for 2014. Stripped of boasts about "investments" for the future and a responsible "balance" between deficit reduction and economic growth, the budget is a status-quo document. It lets existing trends and policies run their course, meaning that Obama would allow higher spending on the elderly to overwhelm most other government programs. This is not "liberal" or "conservative" so much as politically expedient and lazy.
The trends are clear. From 2014 to 2023, the administration projects annual spending on Social Security to rise from $860 billion to $1.4 trillion, assuming its proposal for altering the inflation adjustment of benefits is adopted. Over the same years, annual Medicare and Medicaid spending would go from $828 billion to $1.4 trillion. Meanwhile, defense spending would barely rise from $618 billion to $631 billion. Non-defense discretionary spending (a catchall covering everything from Head Start to the weather service) would increase from $624 billion to $647 billion.
But these are all "nominal" dollars; they don't account for inflation. When the figures are adjusted for price and population changes, shifts are more pronounced. Defense and non-defense "discretionary" spending decline by 22 percent from 2014 to 2023. ("Defense News" reported last week that the Air Force has sharply cut pilot training; there will be more of this.) Social Security rises 25 percent, Medicare and Medicaid 27 percent. (All figures are from Obama's budget.)
What's happening is that savings from shrinking defense and discretionary programs are financing expanded spending for the elderly. As a share of the economy (gross domestic product), non-elderly and non-health programs are rapidly eroding. In 2012, defense and domestic discretionary programs represented 8.3 percent of GDP; by 2023, the administration projects their share at 4.9 percent of GDP. This can't continue indefinitely, because -- at some point -- these programs become completely ineffective or disappear.
But Obama remains unwilling to grapple with basic questions posed by an aging population, high health costs and persistent deficits. Why shouldn't programs for the elderly be overhauled to reflect longer life expectancy and growing wealth among retirees? Shouldn't we have a debate on the size and role of government, eliminating low-value programs and raising taxes to cover the rest? The "spin" given by the White House -- and accepted by much of the media -- is that the president is doing precisely this by putting coveted "entitlement" spending on the bargaining table.
It's phony. Compared with the size of the problem, Obama's proposals are tiny. The much-discussed shift in the inflation adjustment for Social Security benefits to the "chained" consumer price index would save $130 billion over a decade; that's about 1 percent of projected Social Security spending of $11.23 trillion over the same period. A proposal to raise Medicare premiums for affluent retirees is more meaningful but would affect only couples with incomes exceeding $170,000, says Obama aide Gene Sperling.
Similarly, the administration also opposes "wasting taxpayer dollars on programs that are outdated, ineffective or duplicative." But it proposed only 215 "cuts, consolidations and savings proposals," reducing spending by an estimated $25 billion in 2014. That's (BEG ITAL)about seven-tenths of 1 percent(END ITAL) of federal spending. No major program is on chopping block.
The work of politics is persuasion. It is orchestrating desirable, though unpopular, changes. (Popular changes don't require much work.) Obama has the intellectual and rhetorical skills to conduct a debate on government's size and role. But it would be a hard and hazardous political task, because it would challenge the assumptions and interests of wide swaths of the public. There is no guarantee that he would succeed in altering attitudes. Already, his small proposed cuts in Social Security benefits have outraged much of the liberal base.
So Obama has taken a pass. He has chosen the lazy way out. He's evading basic choices while claiming he's bold and brave. A more charitable interpretation is that he's focusing his political talents on more promising causes (gun control, immigration). Either way, government is slowly growing larger while -- in many basic functions -- it's being strangled. This paradox, it seems, will be Obama's questionable legacy.