On Dec. 10, Senate Budget Committee chairwoman Patty Murray and House Budget Committee chairman Paul Ryan unveiled the Bipartisan Budget Act of 2013. Coming after partisan gridlock and political incentives prevented Congress from enacting a constitutionally required budget for almost half a decade, the Ryan-Murray plan was sold as a great budget compromise.
It is not. A budget compromise would mean Democrats agreeing to reform entitlements while Republicans would be willing to stick to defense budget cuts. Instead, the deal is more of the same: more spending today in exchange for spending cuts tomorrow.
In practice, increasing spending has sadly been an area of actual agreement between the two parties in spite of their different rhetoric on the issue. And make no mistake. Even though the whole thing is presented as a deficit-reducing deal, the extensive use of gimmicks (such as paying for one year of spending with ten years of supposed cuts) and increased revenue makes it anything but fiscally responsible.
However, as I have explained in the past, my main objection to the Ryan–Murray deal is that it spends more than sequester levels in both 2014 and 2015. In fact, allowing the government to spend money above the previously self-imposed limit is the real goal of this deal. But that's uncalled for. Under sequestration, spending would have been cut in 2014, but in a far from devastating way — and it would rise again in 2015. It's especially less of a concern when you consider just how much the government spends and how much spending has grown in the last decade.
But this deal and the rhetoric about how brutal the sequester cuts have been are also a bad sign about the willingness of lawmakers to tackle the problem of entitlement spending. Sadly, it's hard to imagine that those who found sequester cuts "devastating" will have the willpower required to reform Medicare, Social Security and Obamacare.
That is a problem, because absent changes to entitlement programs, the United States is on a totally unsustainable path. The U.S. government has racked up $12 trillion in public debt, nearly three-quarters of gross domestic product. Yet that massive sum pales in comparison to the costs of the federal government's unpaid promises.
Although these future commitments are not scored by the Congressional Budget Office, this off-the-books fiscal gap is real, and economists and lawmakers of all stripes are coming to recognize the need for some honest accounting of it. A recent paper by Boston University economist Laurence Kotlikoff for the Mercatus Center argues it adds up to $205 trillion over an infinite time horizon. Other estimates of the fiscal gap range from $54.4 trillion to $86.8 to trillion. But whatever number you pick, our fiscal gap is much bigger than our official debt figure suggests.
Unfortunately, a deal that caves on the small sequester cuts without making any gestures toward addressing our long-term fiscal problems is bad news for taxpayers, since it reveals that once again, all that the two parties can agree on is more spending.