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When fixing the federal budget, consider the big stuff

Do you know any successful companies that budget for their smaller expenditures while neglecting the big ones? Amazingly, Congress does exactly that. When the process works as intended, Congress passes a budget resolution setting totals for spending and revenues, then passes appropriations bills funding everything from defense to national parks, and the president signs them before the new fiscal year begins.

Such an outcome avoids a government shutdown and short-term continuing resolutions, but it can hardly be called a success because the annual appropriations bills account for less than one-third of total spending. The big entitlements—Social Security, Medicare, Medicaid—are outside the budget process, as are interest payments. Similarly, big subsidies in the tax code, such as those to energy companies or homeowners (“tax expenditures”) also continue on auto pilot.

If the budget process is to be an effective tool for reversing the growth of debt, it must include entitlements and tax expenditures, not just annual appropriations, which are not expected to grow much.

It would not be practical or desirable to make changes in Social Security or Medicare every year. But Congress should decide on a spending path for entitlements (as well as major tax expenditures) and review the actual experience regularly—maybe every four years. Spending significantly higher than the expected path should trigger action either to reduce benefits or increase revenues. The only way to ensure that we live within our means and do not keep passing growing debt burdens on to future taxpayers is to include all spending and revenue in the budget process.

Editor’s Note: This post originally appeared on Politico.

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