Lee Hamilton: Balance the budget, sure, but how?


There is a lot of discussion in Washington these days on what to do about the federal deficit.

It continues to grow, and House Republicans in particular have made addressing it a key part of their agenda.

Early on, House Speaker Kevin McCarthy told his caucus it would get a chance to vote on a 10-year pathway to a balanced budget at some point this year. More recently, though, GOP leaders have downplayed that expectation, instead arguing they should focus on how to keep spending down as a short-term goal. And rank-and-file members are weighing in with their own plans, hoping to gain traction in the splintered GOP caucus.

None of this, though, takes into account the rough sledding Republican-favored proposals will face in the Democratic-led Senate, let alone negotiations with the White House.

While a balanced budget remains a potent talking point for many politicians and for voters who worry about the impact of growing deficits, there’s a reason that coalescing around a plan to make significant budget cuts — let alone reach a balance between federal revenues and expenditures — has proven so difficult. That’s because it’s not just brutally hard to achieve but may be politically impossible. Especially if, as both Democrats and Republicans have declared, cuts to Social Security and Medicare and possibly defense are off the table.

To understand why this is, I’ve found a New York Times article from the beginning of March quite helpful. In it, Alicia Parlapiano, Margot Sanger-Katz and Josh Katz — reporters and graphics experts — lay out what it would take to reach a balanced budget in 10 years.

For starters, they point out, taking things off the table — tax increases, say, or cuts to Social Security, Medicare or the military — makes things exponentially more difficult. If all of those were to be considered nonstarters, then balancing the budget would require cutting everything else by 70%. That’s everything from food assistance to retirement benefits for the military to transportation and agriculture subsidies and spending on law enforcement and education.

“Cuts of that magnitude,” the trio write, “would mean the firings of most federal workers in agencies like the F.B.I., the Parks Service and the State Department and huge reductions in food assistance and military retirement.”

It’s hard to imagine something like that could get through Congress.

But that, of course, means that tax increases and changes to Social Security, Medicare and military spending would need to be part of budget discussions. And every one of them is politically tricky.

This hasn’t stopped Republicans in Congress from making a stab at it. The Republican Study Committee, which gathers together most of the GOP caucus in the House, has a plan that relies on deep cuts to Medicaid and other non-defense spending, along with raising the Medicare eligibility age over time to 70, doing the same with Social Security and reducing Social Security payments to higher-wage earners.

The House Freedom Caucus, meanwhile, has its own plan, which involves capping spending at 2022 levels for the next decade, instituting new work requirements for welfare recipients, requiring a congressional OK on all major federal regulations and other changes.

The Congressional Budget Office has a list of more than 100 steps that could make a meaningful dent in the deficit. These range from increasing payroll taxes or creating a new tax on consumption to eliminating itemized tax deductions altogether to deferring spending on military hardware and eliminating some agriculture programs. Each would spark a pitched congressional battle.

My point here is not to say that a balanced budget or even significant steps to cut the deficit is impossible. But as members of the House and Senate and President Joe Biden stake out their positions and then get deep into negotiations, it will help to understand why those negotiations are likely to become tense and difficult.

The budget, after all, is the blueprint for how the government affects life in the U.S. Everyone wants to balance it, but making serious steps in that direction will require true sacrifice.

Lee Hamilton is a senior adviser for the Indiana University Center on Representative Government, a distinguished scholar at the IU Hamilton Lugar School of Global and International Studies and a professor of practice at the IU O’Neill School of Public and Environmental Affairs. He was a member of the U.S. House of Representatives for 34 years. Send comments to [email protected].

No posts to display