Buried in those numbers is another striking message: How little control lawmakers actually exert over annual deficits and, by extension, the still-rising $18 trillion national debt.
According to the analysis, which breaks down changes in forecasts from the nonpartisan Congressional Budget Office since August 2010, acts of Congress are projected to reduce spending by just $1.8 trillion between 2015 and 2024. The bulk of the spending slowdown is due to: (1) sharply lower projected spending on federal health programs, the causes of which are not well understood ($2 trillion). And (2), lower projected interest payments on the national debt ($3.9 trillion). And much of the latter improvement stems from CBO’s recent conclusion that interest rates, now historically low, are unlikely to rise back up to normal levels. The same holds true on the revenue side.
Legislative changes are projected to increase tax collections by $800 billion over the coming decade due to higher taxes on the wealthy adopted during the 2012 battle over the so-called “fiscal cliff.” But the recent recession and the sluggish recovery have knocked $3.9 trillion off the 10-year revenue forecast, the analysis shows, more than offsetting those gains. The analysis is included in a memo set for distribution Thursday by Senate Budget Committee chairman Patty Murray (D-Wash.). Murray highlights the sharp improvement in the country’s fiscal outlook and argues that ascendant Republicans should abandon their cuts-only approach to the federal budget when they consolidate control of Congress in January.
“We’re in a very different situation than we were four years ago. The deficit is lower and federal spending is down dramatically,” Murray said in an interview. “We cannot go into this next budget cycle with Republicans saying we’ll do what we did before and just cut spending.” The memo argues that next year’s budget “should be squarely focused on jobs and broad-based economic growth,” an assertion just about everybody in Congress could agree with.
Murray says that means restoring “critical support [in the federal budget] for education, research and infrastructure,” while Republicans have called an overhaul of the tax code more important. Whichever course lawmakers choose, the analysis suggests that their impact will be swamped by trends in the broader economy.