JONATHAN CHAIT AUGUST 24, 2011
Byron York, writing in the Washington Examiner, points out that entitlement spending has not caused the short-term deficit to rise:
Was there a steep rise in entitlement spending? Did everyone suddenly turn 65 and begin collecting Social Security and using Medicare? No: The deficits are largely the result not of entitlements but of an explosion in spending related to the economic downturn and the rise of Democrats to power in Washington. While entitlements must be controlled in the long run, Washington's current spending problem lies elsewhere.
A lot of the higher spending has stemmed directly from the downturn. There is, for example, spending on what is called "income security" -- that is, for unemployment compensation, food stamps and related programs. In 2007, the government spent $365 billion on income security. In 2011, it's estimated to spend $622 billion. That's an increase of $257 billion.
Then there is Medicaid, the health care program for lower-income Americans. A lot of people had lower incomes due to the economic downturn, and federal expenditures on Medicaid -- its costs are shared with the states -- went from $190 billion in 2007 to an estimated $276 billion in 2011, an increase of $86 billion. Put that together with the $257 billion increase in income security spending, and you have $343 billion.
Add to that the $338 billion in decreased revenues, and you get $681 billion -- which means nearly half of the current deficit can be clearly attributed to the downturn.
That's good stuff! Now York is downplaying the revenue component. And he's also assuming the deficit was okay under President Bush, which it was not -- the budget was structurally imbalanced, and the fact that it ran a non-huge deficit at the peak of the business cycle was not a healthy sign. But he's admirably using sound math here.
Then, unfortunately, York quickly goes off the rails:
There is no line in the federal budget that says "stimulus," but Obama's massive $814 billion stimulus increased spending in virtually every part of the federal government. "It's spread all through the budget," says former Congressional Budget Office chief Douglas Holtz-Eakin. "It was essentially a down payment on the Obama domestic agenda." Green jobs, infrastructure, health information technology, aid to states -- it's all in there, billions in increased spending. ...
Should Republicans base their platform on entitlement reform, or should they focus on the here and now -- specifically, on undoing the damage done by Obama and his Democratic allies? In coming months, the answer will likely become clear: entitlements someday, but first things first.
When the stimulus passed in 2009, conservatives expressed widespread fear that it would permanently add to the federal budget. York is expressing that fear, but it's not true. The stimulus is already running out, and Obama has proposed a series of cuts to domestic discretionary spending even below the pre-stimulus baseline. Indeed, his budget cuts domestic discretionary spending to the bone:
Now, you might object that these are just future cuts to domestic discretionary spending, and they might not happen. I hope you're right. What usually happens is that Congress plans for tight caps to this category, and then when it comes time to implement it, and Congress discovers it actually means things like firing FBI agents and slashing the weather service, it balks.
So I hope domestic discretionary spending does not plunge anywhere near as deep as Obama plans. But the main point here is that the stimulus is already gone.