Steuerle and Roeper Bring Us the Fiscal Democracy Index

Wed, 27 Jan 2010 14:27:20 +0000

In today's USA Today, Gene Steuerle discusses the "Fiscal Democracy Index," defined as the percentage of federal revenue not allocated for mandatory programs, including interest payments.  It is not a pretty picture:

and here is something that I did not know (links in the original):

For the first time in U.S. history, in 2009 every single dollar of revenue was committed before Congress voted on any spending program. Meanwhile, most of government's basic functions — from justice to education to turning on the lights in the Capitol — are paid for out of swelling, unsustainable deficits.

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Blame the recession for some of this dip. But even a recovery only temporarily restores a bit of financial freedom, not enough to reverse the downward trend.

No more annual appropriations are needed to fuel this vicious cycle. On our current path, Rip Van Congress could take a 50-year snooze, and the entire budget (and then some!) would still be spoken for. Tax revenues would rise with economic growth, but not as fast as spending and deficits.

The index is poised to enter the dead zone again later this decade under current law if the president and the Congress don't take more spending and tax subsidy programs off the automatic growth path and then match up revenues to whatever size government they think is right for the times. In particular, they must constrain, cap or set triggers on how much future health, retirement and tax subsidies — the big ticket items — can grow without any vote by Congress.

Both Democratic and Republican presidents and Congresses have presided over this shocking decline — fighting mainly over which downward path we'd take: by cutting revenues without reducing spending or increasing spending without raising revenues commensurately.

Certainly, President Obama didn't create this predicament — whatever the ultimate deficit impacts of stimulus spending and health reform, his two major initiatives to date. But he doesn't have the option of behaving like his predecessors. For instance, President George W. Bush accommodated the disease by paying for neither lower taxes nor new permanent drug benefits.

President Bill Clinton and the Congresses of his time tackled some deficits but eventually kicked the can of ever-growing health and retirement benefits down the road. By the time Obama took office, we had basically taken democracy — the right to have lawmakers represent our real interests — out of the hands of newly elected officials.

Read the whole thing.