Federal Spending: The Things that Count

Elementary school kids always have fun making up hyperbolic, fictitious names for gigantic numbers that bewilder them.

A zillion. A gajillion. A kabillion.

Maybe those kids aren't being histrionic.

Those numbers won't sound so outlandish if the federal debt keeps exploding at its current rate and no one reigns in entitlement spending.

In the next week, anyone who pays any attention to American government is going to get a crash-course in just how much Washington spends, how deep the U.S. is in the hole, how creative government accounting is and how stark the future could look.

It begins with a potential showdown between President Obama and Congressional Democrats pitted against conservative Republicans. Many of these GOP lawmakers just arrived in Washington with marching orders from the heartland to slice and dice spending faster than the sous chef on a Ginsu knife commercial. The main event comes Tuesday night as President Obama delivers his State of the Union message and House Budget Committee Chairman Paul Ryan (R-WI) delivers the official Republican response.

A gifted orator, Mr. Obama enjoys the advantage of the most powerful weapon in the president's toolbox: the bully pulpit before a Joint Session of Congress, broadcast live, coast-to-coast.

Republicans counter President Obama with Ryan, a green eyeshade Jedi Master who understands the intricacies of federal spending, the budget and tax policy better than almost anyone on Capitol Hill.

This is going to get ugly. And if the public really wants Washington to balance the books, it could prove to be very painful.


"I didn't realize how bad it was."

That was the sentiment of one freshman Republican House member, determined to make a difference, but who didn't want to be identified. The refrain is growing among other freshmen who arrived on the scene, bound to cleave government spending but realizing just how messy the fiscal house is.

"I can't believe how long it takes to do things," echoed another freshman Republican, who served for years in state government. And this Washington newcomer wasn't referring to the United States Senate. He was talking about the budget and spending processes in the House.

Today on the House floor, Republicans embark on an effort to chop spending down to 2008 levels. 2008 is an important milepost for the GOP. It signaled the end of the Bush Administration and immediately preceded the $787 billion stimulus package. For two years, Republicans have slung the stimulus law around the necks of Democrats like an albatross. They argue the measure generated few jobs and was emblematic of the Democrats' "big government" approach to problems. Last fall, Republicans saddled dozens of Democrats with attack ads, reminding voters exactly who backed the stimulus.

House Appropriations Committee Chairman Hal Rogers (R-KY) says he'll soon engineer "the largest series of spending cuts in the history of Congress."

But this is a long and tedious process. And while the decibel meters will start pegging into the red over the rhetoric generated at the State of the Union address, the rubber will truly start to hit the road at two important dates: March 4 and March 31.

March 4 is when the current, temporary spending bill running the government expires. It's a relic left over from the Democrats' control of the House. Both sides agreed to punt the issue to March after lawmakers and President Obama failed to settle on a spending plan before the midterm elections.

March 31 is believed to be the earliest date when the amount of debt the government incurs could nudge a self-imposed fiscal canopy. This is known as the "debt limit" or "debt ceiling." And people will hear a lot about this over the next several months.

Republicans say they are adverse to increasing the debt threshold without implementing serious spending cuts. And that's why conservatives like Sen. Jim DeMint (R-SC), Reps. Jim Jordan (R-OH) and Scott Garrett (R-NJ) unveiled a plan to carve $2.5 trillion in federal spending by 2021.

These ideas terrify Democrats.

"We still have just over nine percent unemployment and we're going to hurt people who've already been hurt if we rush into this," said Congressional Black Caucus Chairman Emanuel Cleaver (D-MO), who added that the DeMint-Jordan-Garrett blueprint "is going to bite us."

$2.5 trillion is significant. But remember, the DeMint-Jordan-Garrett proposal wouldn't fully prune the government tree for a decade. The U.S. Treasury has currently issued about $14 trillion in debt now. And the statuary debt ceiling hovers around $14.3 trillion. So something has to happen fast.

Of course, people want to know what happens if the U.S. fails to raise the debt limit. If Congress doesn't act, it could have to shutter some government services or cease Social Security payments.

And if the U.S. defaults on its debt, that could send financial markets spiraling into tailspins not seen since the Great Depression.

This is where it's important to begin talking about the dirtiest secret in Washington.

All of that debt we've discussed falls under the moniker "discretionary spending." It means just that: the government has the discretion to spend it or not. It involves everything from the Army's purchase of tanks to paying rangers in the national parks. And guess what? Everything listed under "discretionary" spending is a drop in the bucket compared to what the government coughs up each year in "non-discretionary" spending, which isn't counted against the debt nor the debt limit.

Of course, everyone's first reaction is that ALL federal outlays are discretionary. Congress and the president DO have discretion in what they spend and don't spend. But years ago, everyone agreed to take entitlements, such as Social Security, Medicaid and Medicare OFF-budget. In other words, they don't count AT ALL against the $14.3 trillion figure the government is on a collision course with. In fact, about TWO-THIRDS of all government spending goes toward entitlements.

The Congressional Budget Office predicts that Medicare and Medicaid "will be the most important determinant of long-term trends in federal spending." And if nothing is done, the Heritage Foundation estimates that entitlement spending could devour all federal revenues by 2052.

Commentators and pols have warned of this looming debacle since the 1980s. Paul Ryan is just the latest in a long line of deficit hawks to come along to plead with his colleagues to fix the problem.

In May, 2008, Ryan developed the "Roadmap for America's Future," a comprehensive plan designed to wrestle with this crushing "off-budget" debt and entitlements. In the roadmap, Ryan unveiled ways to give workers under the age of 55 opportunities to convert their money in thrift savings plans and methods to fully fund Medicare.

This is where electoral politics enters the fray.

Of course, everyone knows that messing with Social Security and now Medicare and Medicaid is the third rail of politics. And if Republicans are serious about altering entitlements, Democrats are more than happy to lower the boom on them.

"House Republicans are doubling down on plans to gamble Social Security in the stock market and eliminating Medicare," said Jesse Ferguson, a spokesman for the Democratic Congressional Campaign Committee (DCCC).Privately, senior House Republicans concede this is where the problem lies for them. They truly want to eliminate spending. But they also know entitlement reform is potentially radioactive. Even if that's where the lion's share of the spending comes from. Off budget.

Meantime, Democrats lean akimbo on the fence, just daring Republicans to discuss snipping granny's Social Security or Medicaid. Democrats know full well they can structure devastating political ads to run against vulnerable GOP freshmen in the fall of 2012.

"It's like we're the dog that finally caught the car," said one Republican House aide. "And you know what happened to the dog."

Which is why there will be much gnashing of teeth over discretionary spending in the coming days, those quaint programs that lawmakers can do something about.

They'll talk about cutting $1.4 billion for NASA. Which is still less than one percent of the federal budget. At least the part that's counted.

There will be chatter about public broadcasting, for which the government is only on the hook for hundreds of millions of dollars. And there are plans to euthanize high speed rail and mass transit programs.

Every little bit counts of course.

When Albert Einstein taught at Princeton, visitors to his office were first greeted by a sign that used to hang on his door.

"Not everything that counts can be counted. And not everything that can be counted, counts," the sign read.

And when it comes to federal spending and entitlements, few are counting the things that count.