The angst over the continuing resolution — rounds of different House CRs and Senate rejection of the same, the shutdown spin, the mini-CRs and fights about a sliver of Obamacare funding that is not embedded in law, like other entitlements — amounts to so little. Perhaps we have become focused on this small segment of the federal government because the parties have been entirely unable to address the real issue, which is entitlements. So like a man looking for his keys under the lamppost because that is where the light is, Congress is tearing its collective hair out over something that hardly justifies the time and energy.
It bears repeating frequently that the discretionary part of the budget (what is at issue in the sequester and the CR mania) is down to less than a third of the budget and dropping, in large part because entitlement spending and debt payment are gradually swallowing a greater and greater share of the total budget. In April, Veronique de Rugy explained that “in FY 2014 mandatory spending plus interest will eat up 67 percent of the budget, leaving discretionary spending with 33 percent of the budget (down from 36 percent in FY 2012). Now by FY 2023, mandatory and interest spending will consume 77 percent of the total budget. Discretionary spending will be left with 23 percent of the budget.”
There is, then, diminishing utility in fixating on a smaller and smaller share of the budget. Moreover, as we learned this week, the discretionary budget covers a lot of things that Americans like and need (e.g. the National Institutes of Health, national parks, veterans benefits, the federal courts). Sure there is still, contrary to Democrats’ insistence, much more than “bone” left on the discretionary flank, but the return in finding it is less productive than ever.
It is also not an endeavor that progressives should be all that enamored with. We are cutting from the young and poor while the middle class and elderly get more of the federal spending pie. Sure, via Medicare, we’ve tackled poverty among the elderly, but we’re also giving a huge amount to wealthy and middle class seniors while slashing national security and neglecting other areas of the budget that poorer Americans could use.
The irony is that the president is very, very concerned about discretionary spending, so much so that he fought the Republicans (unsuccessfully) to prevent sequestration from going forward. Republicans, if they are being logical about it, shouldn’t mind giving a little there if they can get much more in long-term debt reduction from entitlement reform. Don’t get me wrong; I’m not in favor of wasteful or counterproductive discretionary spending. But if it helps to get over time trillions in entitlement reform (thereby cutting the biggest driver of the debt) and the interest thereon, well, that is a deal worth having. And, by the way, the Republicans, at least the ones not bitten by the isolationist bug, want more discretionary funding on the military side.
So rather than fighting tooth and nail to keep the sequester or insisting that the president give them Obamacare defunding, something unattainable, the Republicans would be wise to relent on the CR, give something on the sequester levels and in return get something meaningful on entitlement reform, at least a down payment. Anything else has to be paid for, so for example, the president could get more on higher education in exchange for cutting out useless green energy subsidies. Energy development can be bargained out and in the long-term should result in higher growth and more revenue. Just as Obama will not give on Obamacare, the GOP will not give on taxes. Tax reform to promote growth or remove economic distortion is worthwhile, but not at the price of a tax hike. Aside from that, there should be an effort to restructure and reform programs because they aren’t working. The problem with Medicaid is not only that it costs so much; it is that it is poorly designed, wasteful and fraud-ridden. Just as Republicans should be willing to plow back savings from better Pentagon management, Democrats should be willing to do so for Medicaid, housing and job training.
In short, the CR fight is maddening not only because it is pointless and driven by political extremists, but also because it feeds into our budgetary distraction syndrome. The Republicans need to keep their eye on the ball: entitlement reform, pro-growth policies (regulatory and revenue neutral tax reform), restoration of some defense spending and reform/improvement of policies aimed at helping the most needy. If they must “give” the president some relief on discretionary pay levels, reopen the government and accept that they will need alternatives to Obamacare and evidence of its collapse instead of a quixotic voyage to rip it out, why, then that sounds like a good deal. And regardless, the president surely knows that House Speaker John Boehner is not going to allow the economy and the United States’ creditworthiness go to hell in a hand basket. So let’s stop claiming it’s a “gun to his head” to avoid negotiations on all of what we’ve discussed above. And, right-wingers, in addition to dispelling your fantasy that you could use the CR to get rid of Obamacare funding, let me introduce some more reality: The debt ceiling is no bargaining chip; not in a million years would responsible Republicans and Democrats toss away America’s credit rating. With that in mind, everyone can sit down and start bargaining.