The $3 Trillion Cop-Out

Clinton and Obama haven't said when, if ever, they'd balance the budget. But each has a long list of new spending increases and tax cuts. Both have health-insurance proposals intended to cover the 47 million uninsured. Clinton says her plan would cost $110 billion. Half would be paid by raising taxes on those with incomes exceeding $250,000, something that Obama would also do. Obama would provide a permanent $500 tax cut for about 150 million workers, or $1,000 for a two-earner family; he would also exempt retirees with less than $50,000 from income tax. Clinton would provide annual government matching grants of $1,000 for retirement savings for couples making up to $60,000. Both would provide more-generous tax credits for college. Their lists run on.

Both campaigns insist that all their new proposals are "paid for" through tax increases, closed loopholes, reforms of government contracting and various assumed "savings." It seems doubtful that this claim would survive a strict scrutiny of funding sources, but even if it did, budget issues would remain. Neither candidate offsets the increasing AMT; possibly, savings from withdrawing from Iraq might cover some of those costs. Still, sizable budget deficits would continue.

The truth is that most Americans don't seem bothered. That's why politicians in both parties devote so little effort to addressing government spending or the deficits. As a society, we seem to have made a choice. It is to not control government. Note how our debates proceed. Almost every new spending plan or tax cut is simply piled atop previous spending programs or tax cuts. Democrats have spent seven years denouncing Bush's tax cuts but are willing to repeal only the cuts benefiting those at the tip of the income scale, above $250,000. Perhaps three quarters of the tax cuts would remain. When Republicans created the Medicare drug benefit (2007 cost: $41 billion), it was sim-ply added onto existing benefits.

What we get is government by accretion. Government acquires more and more functions, because no one dares strip away any of the existing functions. People, states, localities and industries think they have a moral entitlement to their tax breaks, benefit checks, subsidies and spending programs. No one's Social Security or Medicare benefit can be reduced or modified, even if the recipient is wealthy and the cost is undesirably high. Outmoded or ineffective programs cannot be ended. There is an unstated presumption that the gradual growth of government is unthreatening to the economy, and although this was arguably true in the past, it may be less so in the future. As the population ages, taxes, budget deficits or both will rise. The increases could be substantial. The fact that we are not debating the possible consequences is a cop-out—but it is a cop-out in which the broad American public is conspicuously complicit.

© 2008